Tuesday, December 9, 2008
Lorillard Tobacco Company on Liberty in America -- Including Liberty to Re-Start Litigation Against Itself?
Interesting paid-advertisement op-ed by Lorillard Tobacco Company in the Opinion section of today's Wall Street Journal. Unfortunately, I can't find the ad online, so I'll have to type from my paper copy.
The headline is "No Choice, No Freedom." Lorillard begins by issuing what is a clarion call for any product-liability libertarian like me (and for disclosure, I represented R.J. Reynolds Tobacco Company in the 1990s). From the ad:
Freedom is the right to choose -- perhaps the most powerful act in our democracy. And nowhere else was that awesome responsibility better displayed than in the recent presidential election, the ultimate act of democratic choice.
Indeed, Americans know and understand the importance of choice. Choice underlies the values of our nation. It is the essence of individual character and ultimately leads to empowerment and engagement. We are all better off with it -- and oppose those who want to limit it.
Choice, of course, demands responsibility. Where that responsibility rests is often the crux of vigorous debate. Government reform and regulation have appropriate places in our society. But that government power to regulate must be balanced against misguided zeal that has the potential to restrict our freedom of choice. Taken too far, such an effort may turn negative and could threaten the basic concept of liberty that Americans have protected for more than 230 years.
It is in that context that Americans should be ever vigilant about the government's encroachment on people's right to choose the legal products they want to enjoy. Should Congress or an Executive Branch department or agency dictate whether we should drink diet soda or regular soda? Drive only certain types of cars? Eat in only certain types of restaurants? We believe the answers to all of those questions is "no." For the government to seek to eliminate that choice is troubling. For it to succeed could be dangerous, and would stamp out the core of the American spirit.
Well said, indeed. Then Lorillard turns to the specific issue -- Menthol cigarettes -- and here's where things get interesting:
With this in mind, we should consider a proposal, that some are advocating, to ban the use of menthol in cigarettes. They claim that menthol cigarettes confer a higher risk for tobacco-related diseases, or that menthol cigarettes are more addictive than non-menthol cigarettes.
And then the key sentence (italics added):
Yet, the existing body of scientific evidence does not support those conclusions.
Is Lorillard trying to re-start tobacco litigation against itself? Smokers who in the future get cancer or other illnesses and who have smoked Menthol cigarettes may sue for fraud and allege that they relied on Lorillard's comment that Menthol is not more dangerous than regular cigarettes. Such potential plaintiffs might hope to cull enough evidence of Menthol's additional danger to survive summary-judgment and put their claims before a jury that, despite voir dire attempts to exclude overt bias, might still be inclined against Lorillard from prior tobacco litigation and settlements. Plaintiffs would still also have to prove reliance on the statements, but the failure of smokers in the last litigation to show individual reliance didn't prevent a litigation firestorm, and plaintiffs' counsel have experimented (although so far lost) with arguments that individual reliance is not needed where the background public knowledge is changed.
Lorillard certainly should press its view before Congress that Menthol is not more dangerous that non-Menthol. But as a strategic matter, do they need to take out a mass-media ad to the public? Such an ad likely does little to create additional support (most Journal readers probably supported them already), but it does open Lorillard up to possible litigation.
And then the ad continues in an appeal to balanced scientific inquiry (and due consideration that Menthol might not be more dangerous) that might be seen by some as vaguely reminiscent of the 1954 Frank Statement that figured prominently in the last litigation. From today's ad:
Before Congress attempts to ban menthol cigarettes, which are smoked by nearly one-third of all smokers, they have a responsibility to know the facts and have all the evidence needed to make such an important decision. That is why Lorillard advocates for a proper scientific review based on sound information and scientific evidence and data.
Finally, the ad returns to apply its earlier pro-choice sentiment to tobacco:
Young people should not smoke, and we support efforts to keep them from starting. But, if adults, who can and should assess the risks of smoking, choose to smoke, then shouldn't they have the freedom to choose whether to smoke regular or menthol cigarettes?
We respect every individual's position on whether or not to smoke. We trust that this respect is reciprocal and the right of Americans to choose the legal products they want is equally cherished.
Setting aside the debate on the dangers of Menthol cigarettes, my verdict is that Lorillard is right on principle, wrong on strategy.
Thursday, December 4, 2008
Article on Bloomberg.com -- Altria Punitive-Damages Case Divides U.S. High Court, by Greg Stohr. Here's an excerpt:
A divided U.S. Supreme Court wrestled with a $79.5 million award against Altria Group Inc.’s Philip Morris USA unit in an Oregon smoker lawsuit and discussed the possibility of broadening the scope of the case.
In a case now before the justices for the third time, Philip Morris is seeking a new trial and a reprieve from what would be a record payment in a smoker suit. The cigarette maker says the Oregon Supreme Court improperly circumvented a 5-4 ruling the company won at the U.S. Supreme Court last year. The Oregon court then reaffirmed the award, saying the company violated a state procedural requirement.
Comments during today’s argument suggested that several justices may switch sides, putting the outcome in doubt. Antonin Scalia, who dissented in 2007, today said the Oregon court had disobeyed the high court’s instructions. At the same time, Stephen Breyer and David Souter, who previously sided with Philip Morris, hinted they might vote against the company this time.
Friday, November 14, 2008
A press release by Souza Cruz, a subsidiary of British American Tobacco, indicates that a Sao Paulo Court of Appeals vacated an award against Souza Cruz and Philip Morris Brasil, a subsidiary of Philip Morris International. Here's an excerpt:
The 7th Civil Chamber of the Court of Appeals of the State of Sao Paulo vacated yesterday, by unanimous vote, the judgment of the court of 1st instance that had found in favor of the indemnification claim brought by the Association for the Defense of the Health of Smokers ("ADESF") against the Brazilian cigarette manufacturers Souza Cruz (a subsidiary of British American Tobacco) and Philip Morris Brasil (a subsidiary of Philip Morris International). The Court of Appeals granted the appeals of the manufactures on grounds that the lower civil court decision had violated the constitutional principle of due process of law since it had failed to extend to the manufacturers the opportunity of producing any evidence, including expert evidence that had already been ordered by the Court of Appeals itself.
. . .The main reasoning of the Brazilian Courts for rejecting this type of claim is: consumers have free will to decide (or not) to smoke, since the decision to consume the product or not is a question of free choice, the widespread public knowledge of the diseases associated with cigarette consumption and the absence of defect in the product because it is a product of inherent risk, the manufacture, distribution and sale of which in Brazil is authorized and subject to severe regulations by the State.
Tuesday, October 21, 2008
Professor Andrew Morriss (U. Illinois; picture left) comments in a Federalist Society SCOTUScast on Altria Group v. Good, a preemption case that was recently argued in front of the United States Supreme Court.
Wednesday, October 15, 2008
Mike Scarcella has an article today in the Legal Times that provides the latest report on Big Tobacco's oral argument before the D.C. Circuit. Here's an excerpt:
Sentelle and Tatel -- who dominated the nearly three hours worth of argument, held in the court's ceremonial courtroom -- questioned whether Kessler and the government sufficiently and clearly identified the acts that make up a pattern of racketeering activity. Sentelle explored the extent to which a corporation, beyond any individual employee, can be found to have a specific intent to defraud.
"They had to turn our entire industry into something like the Gambino family," argued Jones Day partner Michael Carvin, who represented Philip Morris with Gibson, Dunn & Crutcher partner Miguel Estrada. RICO laws, established in 1970 to take on the mob, are commonly used in the criminal arena.
In her decision, which followed a nine-month bench trial, Kessler ordered the tobacco industry to stop using descriptions such as "light" and "low-tar" on cigarette boxes. The judge also issued a permanent injunction. "It places the entire conduct of a corporation's business at the peril of a summons or contempt," Estrada argued.
Monday, October 13, 2008
Philip Morris Brings First Amendment Challenge Against San Francisco Ban on Selling Cigarettes in Drug Stores
Article in AmLaw Daily -- Munger Reps Philip Morris in Unprecedented Tobacco Sales Ban Case, by Zach Lowe. Here's an excerpt:
In 2001 the U.S. Supreme Court upheld the right of tobacco companies to advertise in stores over the objections of Massachusetts officials. Now the city of San Francisco is trying a different tactic to curb cigarette sales: banning them altogether. A law that went into effect on Oct. 1 prohibits the sale of all tobacco products in drug stores, including retail chains like Rite Aid that also house pharmacies.
Philip Morris is challenging the case, and they've turned to longtime counsel Munger, Tolles & Olson to come up with a novel argument against the San Francisco law. The lawyers are claiming that the regulation violates the First Amendment because it effectively forces tobacco companies to pull the advertising that accompanies its products in drug stores. Munger lawyers cited the 2001 case, Lorillard Tobacco v. Reilly, a matter argued in part by a team at Latham & Watkins.
Monday, October 6, 2008
- The government sided with the plaintiffs on the implied preemption quesiton, but only on that question.
- But the judges weren't buying it - asking why the FTC hasn't regulated these misleading ads since they know about them for some time. Justice Scalia said: “When did the Commission know this stuff? I had a case when I sat on the Court of Appeals, so it had to be before 1984…It’s been general knowledge for a long time, and the FTC has done nothing abput it.”
- The defendants oral argument focused on the express preemption issue only. Denniston quotes the following exchange between the defendant's lawyer, Theodore Olson, and Justice Scalia --- Olson: “I’d like to spend no time on the implied preemption argument." Justice Scalia: “Good idea.”
After turning away those cases and dozens of others that accumulated during the summer, the court heard arguments in a tobacco case and suggested it would side with tobacco companies in their fight to block lawsuits over deceptive marketing of "light" cigarettes.
Several justices were skeptical that state laws against fraudulent advertising could be used to sue the makers of "light" and "low-tar" cigarettes when a federal law on cigarette labeling rules out lawsuits that involve smoking and health.
"How do you tell it's deceptive or not unless you look at smoking and health?," asked Chief Justice John Roberts.
Three Maine residents sued Altria Group Inc. and its Philip Morris USA Inc. subsidiary under the state's law against unfair marketing practices. The class-action claim represents all smokers of Marlboro Light or Cambridge Light cigarettes, both made by Philip Morris.
Tuesday, September 9, 2008
Article in the Wall Street Journal -- Reynolds American to Cut 570 Jobs, by David Benoit. Here's an excerpt:
Reynolds American Inc. will lay off 10% of its U.S. work force and refocus R.J. Reynolds Tobacco Co. as the company deals with a slowing market for cigarettes and a competitor's big move into the smokeless-tobacco market.
The announcement from Reynolds American comes the day after competitor Altria Group Inc. announced it was acquiring UST Inc. in a $10.4 billion deal. That deal gives the parent of Marlboro cigarettes the lead in smokeless-tobacco production -- the fastest-growing tobacco segment -- with UST's Skoal brands.
Reynolds American said Tuesday it is looking to simplify and streamline its product lines in order to cut costs. The efforts -- which include shifting company focus from the menthol Kool brand cigarette to the Camel brand -- will result in the cutting of 570 jobs from the work force of Reynolds American and R.J. Reynolds in Winston-Salem, N.C. The company will also review the value of the Kool trademark, which could result in a write-down for the current quarter.
Wednesday, July 30, 2008
Bruce Weber of the New York Times reports that Dr. Jules B. Richmond, known for founding Project Head Start and campaigning against the tobacco industry, died Sunday. Here's an excerpt:
In his 80s, [Dr. Richmond] testified in two trials involving flight attendants that secondhand smoke was responsible for their ill health.
One of those cases, a class-action suit involving a flight attendant who developed lung cancer though she had never smoked, led to a $300 million settlement in 1997 that included starting a research institute to study tobacco-related diseases. In the second case, a class action on behalf of Florida smokers, a court awarded $145 billion in punitive damages against six tobacco companies, the largest such award in history until it was overturned by an appeals court.
Monday, June 9, 2008
The Supreme Court today granted certiorari to hear another appeal concerning punitive damages in Williams v. Philip Morris, this time to decide whether the Oregon courts complied with the U.S. Supreme Court's earlier ruling in the case. Here's a link to the Oregon Supreme Court opinion in question, and an excerpt from the NY Times article by David Stout:
The United States Supreme Court will review a $79.5 million punitive-damages award against Philip Morris in the latest back-and-forth between the justices and the high court of Oregon. The last time the case was before the United States Supreme Court, the justices overturned the award by an Oregon jury on the ground that jurors might have improperly calculated the monetary figure to punish the cigarette maker, by weighing the harm the company caused to smokers other than Mr. Williams.
That ruling, on Feb. 20, 2007, sent the case back to the Oregon Supreme Court, which concluded in January that the award against Philip Morris could stand because the United States Supreme Court had acknowledged that harm to people not involved in the lawsuit could still play a role in the punitive-damages calculation “in the sense that it is relevant to showing the degree of reprehensibility of a defendant’s conduct.”
In announcing on Monday that it would look at the Williams case once again, the United States Supreme Court said it would not consider whether the amount of the judgment was constitutionally permissible. Rather, it would decide if the Oregon court’s January action was taken in defiance of the February 2007 ruling.
For earlier accounts of the Williams case on this blog, see here (on the Supreme Court's opinion and a related editorial), here (on a subsequent law review symposium), and for earlier accounts with links to articles, audio, and more, see here, here, here, here, here, here, and here.
Tuesday, April 22, 2008
Editorial in the Wall Street Journal -- Cynicism and Big Tobacco. Here's an excerpt:
Congress wants to give regulators more authority over the tobacco industry – so what else is new? The surprise is that currently there are no plans to give it to the Environmental Protection Agency. Surely cigarette smoke qualifies as a dangerous pollutant.
Not that Congress needs any ideas, but handing off tobacco to the EPA makes about as much sense as its nearly completed pass to the Food and Drug Administration. A bill expected to be voted on soon would impose new restrictions on marketing, raise cigarette taxes, and police the ingredients in tobacco products, including nicotine levels. Any reckless FDA policy is bound to be popular, and sure enough, the bill has 220 co-sponsors in the House and 54 in the Senate, including all three Presidential contenders.
This is all phenomenally cynical, even for Congress. Since the 1964 Surgeon General's report, the health consequences of this hazardous if legal product have been ubiquitous, which no doubt accounts for the 58% plunge in smoking among U.S. adults. The FDA tobacco gambit is explainable only because the politicians have dumped public health for public revenue.
Tuesday, April 1, 2008
Last September, Charleston Law School hosted a symposium entitled, Punitive Damages, Due Process, and Deterrence: The Debate After Philip Morris v. Williams. (See prior posts here and here.) The resulting symposium issue of the Charleston Law Review has just been published. Articles in the issue include the following:
Anthony Sebok, After Philip Morris v. Williams: What is Left of the "Single-Digit" Ratio?, 2 Chas. L. Rev. 287 (2008)
Anthony J. Franze, Clinging to Federalism: How Reluctance to Amend State Law-Based Punitive Damages Procedures Impedes Due Process, 2 Chas. L. Rev. 297 (2008).
Neil Vidmar & Matthew Wolfe, Fairness Through Guidance: Jury Instruction on Punitive Damages After Philip Morris v. Williams, 2 Chas. L. Rev. 307 (2008)
Christopher J. Robinette, Peace: A Public Purpose for Punitive Damages?, 2 Chas. L. Rev. 327 (2008).
Keith N. Hylton, Due Process and Punitive Damages: An Economic Approach, 2 Chas. L. Rev. 345 (2008)
Victor E. Schwartz & Christoper E. Appel, Putting the Cart Before the Horse: The Prejudicial Practice of A "Reverse Bifurcation" Approach to Punitive Damages, 2 Chas. L. Rev. 375 (2008)
Elizabeth J. Cabraser & Robert J. Nelson, Class Action Treatment of Punitive Damages Issues After Philip Morris v. Williams: We Can Get There From Here, 2 Chas. L. Rev. 407 (2008)
Byron G. Stier, Now It's Personal: Punishment and Mass Tort Litigation After Philip Morris v. Williams, 2 Chas. L. Rev. 433 (2008).
Michael L. Rustad, The Uncert-Worthiness of the Court's Unmaking of Punitive Damages, 2 Chas. L. Rev. 459 (2008)
Downloads of the articles via .pdf files are available at TortsProf Blog.
Thursday, February 28, 2008
The American Enterprise Institute has posted the audio and video for its panel presentation on February 21 on Federal Preemption and the Supreme Court. AEI's Ted Frank moderated the panel, which included Michael Greve (AEI), Catherine Sharkey (NYU), Daniel Troy (Sidley Austin), and Brian Wolfman (Public Citizen).
Sunday, February 17, 2008
Professor Mark Geistfeld (NYU) has posted his paper, Punitive Damages, Retribution, and Due Process, 81 Southern Cal. L. Rev. 263 (2008), on the NELLCO Legal Scholarship Repository. Here's the abstract:
Tort law provides awards of punitive damages for reasons of deterrence and retribution. In light of a recent decision by the U.S. Supreme Court in Phillip Morris USA v. Williams, the retributive rationale for punitive damages will inevitably come under heightened scrutiny. The case involves a punitive award of $79.5 million, which is ninety-seven times greater than the compensatory damages, making it constitutionally suspect for exceeding the single-digit ratio between punitive and ompensatory damages. The Court, though, has never addressed the institutional issue in a case involving serious bodily injury or death, and so Williams poses a number of new questions. How can compensatory damages provide an appropriate baseline for evaluating punitive damages in a case of wrongful death, given that monetary damages provide no compensation to a dead person? What is the appropriate baseline? Any future deterrence provided by a punitive award cannot protect the decedent’s tort right, and so the award must be justified exclusively in terms of retribution. Is retribution inherently subjective and arbitrary, unless constrained by some objective measure such as the single-digit ratio between the punitive and compensatory damages? Or is there some way to translate retribution into dollars? These questions are not limited to wrongful death cases and must be resolved by any court trying to determine whether a punitive award is unconstitutional for exceeding the single-digit ratio. These questions can all be answered once retribution is tied to the inherent limitations of compensatory damages, which yields a method for quantifying this form of punitive damages. Based on government data and methodology for quantifying the social cost of a premature death, this method shows why vindication of the decedent’s tort right in Williams justifies the $79.5 million punitive award. When formulated in this manner, vindictive damages satisfy the requirements of both substantive and procedural due process and provide a baseline for reviewing courts to determine whether any given punitive award, like one based on general deterrence, is excessive in violation of substantive due process. This method fully accounts for the reprehensibility factors that determine the constitutionality of a punitive award, while also explaining why the Court could defensibly rely on procedural due process to reverse and remand Williams back to state court.
Tuesday, January 29, 2008
Article in the Wall Street Journal -- Philip Morris Readies Aggressive Global Push, by Vanessa O'Connell. Here's an excerpt:
Sitting in his office overlooking Lake Geneva, Philip Morris International Chief Executive André Calantzopoulos takes a long drag from an unusually short cigarette. Called Marlboro Intense, the product has been shrunk down by about a half inch, and offers smokers seven potent puffs apiece, versus the average of eight or so milder draws.
The idea behind Intense is to appeal to customers who, due to indoor smoking bans, want to dash outside for a quick nicotine hit but don't always finish a full-size cigarette. Pointing to his lit Intense, the CEO says there are "possibly 50 markets that are interested in deploying it."
Marlboro Intense is likely to be part of an aggressive blitz of new smoking products PMI will roll out around the globe once the company -- now a unit of New York-based Altria Group Inc. -- becomes a standalone entity. That change will be set into motion tomorrow, when the Altria board is expected to approve a long-awaited decision to split PMI from Philip Morris USA. The move would free the tobacco giant's international operations of legal and public-relations headaches in the U.S. that have hindered its growth.
The separate entity, for example, would be exempt from U.S. tobacco regulations and out of reach of American litigators. Importantly, its practices would no longer be constrained by American public opinion, paving the way for broad product experimentation.
Friday, January 18, 2008
The Supreme Court today granted cert in two preemption cases that will have significance for mass tort litigation. In Wyeth v. Levine, No. 06-1249, the Court will decide whether the FDA's prescription drug labeling judgments preempt state law liability claims for failure to warn. In a case involving Wyeth's anti-nausea drug Phenergan, the Vermont Supreme Court ruled that the FDA regs only provide a floor on labeling requirements, so states are free to enforce their own. In Itria Group v. Good, No. 07-562, the Court is asked to decide whether federal law preempts state-law challenges to FTC-authorized statements in cigarette advertising about "light" or "low tar" cigarettes.
You can see brief descriptions of these cases on ScotusBlog. I'm sure more will follow from the defense perspective on the Drug and Device Law blog. Public Citizen is a good resource for the consumer's perspective on this issue.
Friday, December 28, 2007
The BNA Class Action Reporter reports that a Minnesota Court of Appeals ruled that "a federal cigarette labeling law
does not preempt state-law claims that representations about "light"
cigarettes were fraudulent." See Dahl v. R.J. Reynolds Tobacco Co., Minn. Ct. App., No. A05-1539, 12/4/07. The court followed the First Circuit which held in Good v. Altria Group, Inc., 501 F.3d 29 (1st Cir. 2007) that the Federal Cigarette Labeling and Advertising Act does not preempt state law claims. It diverged from the Fifth Circuit, which held in Brown v. Brown & Williamson Tobacco Corp., 479 F.3d 383 (5th Cir. 2007) that such claims are preempted.
Thursday, December 6, 2007
Point of Law flags a recent story in the New York Sun -- Judge Lands at Center of a New York Legal Mystery, by Joseph Goldstein -- which chronicles the use of the "related-case" designation by plaintiff's lawyers to maneuver their cases before Judge Weinstein in the Eastern District of New York.
I first encountered plaintiffs' use of this device as a lawyer for defendants in the Simon II tobacco case, which plaintiffs had put before Judge Weinstein as a "related case." A court might justifiably want to keep related cases before a judge with related cases -- there's an argument that it's inefficient to educate multiple judges about the same complex factual and legal issues. But the devil is in the details. Take a look at the Eastern District of New York civil action cover sheet: Download js44-45.pdf . The cover page has a section asking whether there are "RELATED CASE(S) IF ANY" and includes a line for Judge and Docket Number. The plaintiff then has the ability to list any case and judge on the line, and then I believe the case is automatically routed to that judge.
The problem is that there may be multiple judges in a district who have cases that are arguably related to the plaintiff's case. The plaintiff might list whichever judge the plaintiff believes is most inclined to the plaintiff's position -- a system that biases judge selection in favor of plaintiffs. And then as the article notes, the defendant may be held to have no standing to challenge the "related case" judge selection by plaintiffs, on the remarkable grounds that it is an administrative determination when in fact the determination has been made not by an administrator or a judge, but by opposing counsel. Imagine that the first judge plaintiffs get in a mass tort is one who they don't like; then when filing another case, they list no related case, and hope for another particular judge; finally, once the desired judge is obtained, then all future cases are checked as "related" to that cases before that desired judge only.
A better system would be for plaintiffs lawyers to be informed that they are ethically bound to list every case and judge that counsel is aware the case might be reasonably considered related to. If the "related case" box is checked, the court -- through administrators or a judge committee -- should undertake an independent review of whether any other cases and judges are implicated. (For example, court administrators could circulate a weekly "related case" email to clerks, asking if their judges have any cases that are related.) If several judges are involved in the cases, then the case should be randomly assigned among those judges -- unless the court makes its own decisions to centralize all cases before a single judge for administrative reasons. Case assignment to judges is a decision that should be made by the court, not the litigants -- and certainly not only one type of litigant.
Friday, November 30, 2007
Top plaintiffs' lawyer Dickie Scruggs, of tobacco and asbestos fame, has been indicted for alleged attempted bribing of a Mississippi state judge in connection with the distribution of fees from the Katrina insurance litigation. As with the separate Milberg Weiss allegations about paying class representatives, the government appears to have much stronger evidence against a less-well known lawyer intermediary, who was allegedly working on behalf of the well-known plaintiffs' lawyer. In the Katrina litigation, that intermediary is alleged to be Timothy Balducci, who was audiotaped offering the bribe and delivering the money, according to the government. Scruggs denies the allegations.
The Wall Street Journal has details on the build up of the case in the article, How the Scruggs Case Came Together, by Ashby Jones and Peter Lattman. In addition, an editorial in the Journal -- The Trial Bar on Trial -- celebrates the possible downfall of prominent tort lawyers who were indicted this year, including Bill Lerach, Dickie Scruggs, and others at Milberg Weiss including Melvyn Weiss.
If true, all of these allegations suggest remarkable hubris in at least some of the top plaintiffs' lawyers. One wonders about the effect of a lifestyle of private jets and multiple wins of multiple millions (or tens of millions) in fees. One also wonders about the effect of high-risk, winner-take-all, contingency fee litigation. Brash and aggressive personalities seem to thrive in such an environment -- but they too must keep in mind that lawyers ultimately serve the client (not the other way around) and that no one (especially not the lawyer) is above the law.