News
Product Liability
Aug. 7, 2002
High Court Clears Way for Tobacco Suits
SAN FRANCISCO - The California Supreme Court declared open season on cigarette makers Monday in a pair of rulings expected to trigger a wave of suits by sick smokers.
The high court sharply limited both the scope and duration of a statutory tort immunity that is considered the first line of defense for tobacco companies trying to fend off liability for smoking-related illnesses.
Monday's rulings appear to bolster a handful of multimillion-dollar verdicts that were challenged on appeal, and the outcome of those cases is certain to encourage more plaintiffs to bring claims against such household names as Philip Morris and R.J. Reynolds.
The pro-plaintiff rulings are especially significant because California is one of the few places in the nation where juries have consistently shown sympathy to smokers blaming tobacco companies for their illnesses.
"This takes away any hesitation that people had about jumping into the fray and wasting their time and money because of concern the Supreme Court would say, 'There can be no lawsuits,'' said Madelyn Chaber, of San Francisco, the lead plaintiffs attorney in one of Monday's cases, Naegele v. R.J. Reynolds, 2002 DJDAR 8789.
The only restriction now facing plaintiffs is that they cannot introduce evidence of tobacco company misconduct between 1988 and 1998, a period during which cigarette makers were protected by an immunity statute enacted by the Legislature.
But Naegele holds that even the 10-year statutory immunity is not absolute if plaintiffs can show that the additives mixed with nicotine during the manufacturing process made smoking even more dangerous.
Monday's rulings did not go as far as plaintiffs attorneys would have liked: Plaintiffs were urging the court to find that tobacco companies were never really immune from tort suits, even during the immunity period.
The court's refusal to write off the immunity period entirely was hailed as a victory by attorneys representing R.J. Reynolds, who asserted that the biggest California trial court judgments in favor of smokers to date should now be revisited and possibly reversed.
"This is a victory for fundamental fairness,' Charles Blixt, the North Carolina-based company's executive vice president and general counsel, said in a prepared statement. "We are pleased that the California Supreme Court refused to rewrite the rules after the fact."
But what the tobacco companies advocated for and did not get from the court may be far more significant in the context of future litigation. They argued for complete immunity from any personal injury suits prior to 1998, a position that would have made it impossible for anyone who has been smoking for decades to now blame the companies for a cancer diagnosis.
For plaintiffs, the 10-year immunity period hardly makes a difference if they can establish that they first started smoking in the 1950s or '60s and that the tobacco companies were responsible for their addiction even while publicly downplaying the health risks associated with smoking.
"We don't need those 10 years,' Chaber said. "There is a vast wealth of documents and behaviors by the tobacco companies pre-1988."
At issue for the court was how much statutory protection was given to the tobacco industry when the Legislature first enacted an immunity statute in 1987, and how the law changed when the Legislature amended Civil Code Section 1714.45 in 1997.
Tobacco is one of several consumer products, including butter and castor oil, specifically listed in the 1987 law that restricted tort claims for personal injuries. Ten years later, the Legislature amended the law to remove tobacco from the list.
In both the cases before the high court, the plaintiffs' complaints were dismissed prior to trial on the grounds they were barred by Section 1714.45.
Plaintiff Betty Jean Myers began smoking in 1956 and continued to smoke heavily until 1997. In April 1998, she was diagnosed with lung cancer, allegedly caused by her exposure to tobacco.
Writing for the high court majority in Myers v. Philip Morris Companies, 2002 DJDAR 8796, Justice Joyce L. Kennard rejected both the defendants' position that the 1988 immunity statute was retroactive and the plaintiff's position that the 1998 repeal statute was retroactive.
"Before Jan. 1, 1988, general tort principles defined the extent of any tort liability that tobacco companies might have for manufacturing or distributing their tobacco products for sale to voluntary consumers,' she wrote. "When, 10 years later, the California Legislature repealed the statutory immunity for tobacco manufacturers in product liability actions, it reinstated those general tort rules."
Justice Carlos R. Moreno dissented, arguing that the 1998 repeal statute was meant to operate retroactively, thus depriving the tobacco companies of the liability shield that had been enacted in 1988.
In Naegele, the court examined which forms of conduct by tobacco companies were covered by the 10-year immunity period. The 1st District Court of Appeal had held that the only exceptions to immunity were manufacturing defects or breach of express warranty.
The high court's majority found that the protection from liability is not so broad, concluding that immunity does not extend to allegations that the companies tainted unadulterated tobacco with additives that would increase the risk of smoking.
Joseph Naegele's trial court complaint alleged that R.J. Reynolds "manipulated the addictive properties of cigarettes via ... additives" and "controlled nicotine delivery to the smoker, through adding ammonia."
"The essence of these allegations is that defendant tobacco companies adulterated the cigarettes plaintiff smokes with additives that exposed him to dangers not inherent in cigarette smoking,' Kennard wrote. "Because, as we have explained, the statutory immunity does not shield a tobacco company from liability for injuries or deaths caused by something not inherent in the product itself, the immunity statute does not bar these claims."
Kennard also concluded, however, that the immunity statute does bar Naegele from pursuing fraud claims that the tobacco companies lied about the addictive nature of cigarettes so consumers wouldn't know just how dangerous smoking is.
In a concurring and dissenting opinion, Justices Moreno and Kathryn Mickle Werdegar contended that the majority was wrong to bar the fraud claims.
"As discussed, plaintiff alleges that, as a consequence of defendants' misleading conduct, he and other ordinary consumers did not during the immunity period appreciate the relevant risks, specifically the risk of addiction, involved in the consumption or use of tobacco,' Werdegar wrote. "Moreover, once an individual is addicted to a substance, that individual arguably cannot be deemed a voluntary consumer."
San Francisco attorney H. Joseph Escher III, who represented R.J. Reynolds before the Supreme Court, said Monday it will be "next to impossible" for plaintiffs to prevail on additive claims because they would have to isolate the health risks of hundreds of individual chemicals that go into cigarettes.
"Nobody is going to say that makes the tobacco more dangerous and nobody is going to say that's what caused the injury,' said Escher, of Howard Rice Nemerovski Canady Falk & Rabkin.
In cases that have gone through trials, tobacco companies generally have defended themselves by arguing that smokers opted not to kick their habits despite the "universal knowledge" that smoking is unhealthy.
In most states, the argument that individuals are responsible for their own actions has insulated the tobacco industry from large jury awards.
But in a few states, California foremost among them, juries have socked the tobacco companies with heavy compensatory and punitive damages after concluding they deliberately misled consumers about health risks. A Los Angeles jury last year hit Philip Morris with the largest punitive damage award to an individual in U.S. history - $3 billion - which was later knocked down by a judge to $100 million.
That judgment and a $26 million San Francisco judgment are both being challenged on appeal by tobacco lawyers. The tobacco companies are now likely to ask courts to set aside the judgments because the juries were at least partly influenced by evidence from within the 10-year immunity period.
"[Monday's] rulings are going to make it hard for plaintiffs to prevail and the cases they have won need to be retried,' said Escher.
Plaintiffs attorneys counter that jurors saw plenty of damning evidence, much of it from tobacco company internal documents dating back to the 1950s, for appellate judges to uphold the trial judgments.
The plaintiffs attorneys say it's not a big deal that the 1988-98 immunity period would bar them from showing jurors the now-infamous television footage of executives from the nation's leading tobacco companies swearing before Congress that they do not believe nicotine is addictive.
Los Angeles attorney Michael Puize, who won the $3 billion verdict, said jurors in his case found the tobacco companies liable for specific acts of wrongdoing dating back to the 1960s.
"Those causes of action are totally impervious to attack by Philip Morris,' he said.
Plaintiffs and defense lawyers offered sharply different views of how Monday's rulings will affect future litigation.
"To plaintiffs attorneys who have been sitting on the sidelines, my request to them is to get going now,' Puize said. "Now is the time. This is a righteous cause."
Ronald Olson, of Munger, Tolles & Olson in Los Angeles, who represented Philip Morris, said that "whatever kind of spin the plaintiffs want to give it, I'm not going to engage in that debate.
"But I don't see how anyone can read this without recognizing that the playing field has been significantly narrowed,' he said.
John Ladd, a San Francisco plaintiffs attorney who has three smoker suits in the courts, cautioned that anti-tobacco litigation is still in its infancy. He advised lawyers to choose their battles carefully because tobacco companies won't surrender without a tough fight.
"I think eventually the tobacco companies will have a big price to pay, but it's going to take plaintiffs lawyers willing to take the risk to expend a lot of effort on cases where the outcome is uncertain,' he said. "The eventual recovery will be from the bankruptcy courts many years from now."
#311015
Peter Blumberg
Daily Journal Staff Writer
For reprint rights or to order a copy of your photo:
Email
Jeremy_Ellis@dailyjournal.com
for prices.
Direct dial: 213-229-5424
Send a letter to the editor:
Email: letters@dailyjournal.com