Arguments in Tobacco Case Center on Preclusive Effect of Factual Findings

In a lively and complex Gordian Knot of an argument before a federal appeals court on Tuesday, lawyers for the nation’s largest tobacco companies wrangled with attorneys for a woman whose husband died of lung cancer over whether factual findings in a 2006 Florida state case may be applied in some 4,000 federal death and injury suits.

The arguments, which went far longer than the 15 minutes allotted per side, focused primarily on whether plaintiffs going forward with individual suits in federal court would have to relitigate matters decided by the 2006 state court jury in Florida. Some of those findings include: tobacco companies falsified statements and made cigarettes that were dangerous.

Another issue for the lawyers — New York University law professor Samuel Issacharoff for the plaintiffs-appellants and Mayer Brown’s Andrew L. Frey, also of New York, for defendants-appellees R. J. Reynolds Tobacco Co., Phillip Morris USA Inc. and Lorillard Tobacco Co. — was whether a federal district court has the authority to, essentially, overrule the Florida Supreme Court.

The three judges on the 11th U.S. Circuit Court of Appeals panel, Ed Carnes, Frank M. Hull and Senior Judge R. Lanier Anderson, pounced on Issacharoff as soon as he stepped to the podium. They peppered him with questions and hypotheticals; passed briefs fluttering with multicolored tabs back and forth, jabbing their fingers at relevant passages; and good-naturedly interrupted him and each other as they dissected the issues.

The primary issue arose from a collateral challenge to the final determination of the Florida Supreme Court in a class action known as Engle v. Liggett Group, 945 So.2d 1246. In that case, a lower state court jury found in favor of individual plaintiffs and the class as a whole, awarding $145 billion in punitive damages.

When the tobacco companies appealed, Florida’s 3rd District Court of Appeal in Miami, and later the state Supreme Court, upheld two of the individual verdicts (the other was barred by the statute of limitations). But they found that the $145 billion punitives award had improperly preceded a liability determination. The higher courts prospectively decertified the class on the grounds that individual determinations of specific causation and damages couldn’t be established on a classwide basis.

Most importantly, relevant to Tuesday’s argument, the Florida Supreme Court found what it called a “pragmatic solution” to re-trying thousands of liability cases. It ruled that Florida common law would permit common findings to be “retained” in follow-on damage actions. In other words, some of the jury’s classwide findings would be given preclusive effect in subsequent individual trials of one-time class members.

Among those findings were the jury’s determination that the tobacco companies: marketed cigarettes that were “defective and unreasonably dangerous;” concealed or omitted material information about the health and addictive effects of smoking; and failed to exercise the “degree of care” that a “reasonable cigarette manufacturer” would have exercised under similar circumstances.

The tobacco companies petitioned the U.S. Supreme Court for certiorari, arguing, among other things, that the jury’s findings were too general to be given preclusive effect. As the petition framed it, the issue was whether the “due process clause prohibits a state from giving preclusive effect to a jury verdict when it is impossible to discern which of numerous alternative grounds formed the basis for the jury’s finding of wrongful conduct.” The high court denied cert in 2007.

The litigants eventually wound up in the U.S. District Court for the Middle District of Florida before Judge Harvey E. Schlesinger. In 2008, the defendants made a Federal Rule of Civil Procedure 16(c) motion, arguing that application of the Engle preclusions would conflict with due process guarantees under the 14th Amendment and with Florida law. The plaintiffs responded that the defendants were asking the district court improperly to “in effect sit as a further appellate court.”

The plaintiffs added, according to the district court’s order, that they sought to stop the tobacco companies from “denying liability and general causation as to all former class members.”

Or, as Issacharoff, who represents 19 other plaintiffs in this action, framed it: Plaintiff Bernice Brown’s husband, Levi Brown, died of lung cancer. Will she have to reprove that cigarettes killed him?

The district court’s opinion, as the 11th Circuit panel noted repeatedly, is not precisely clear on that issue.

Schlesinger’s order says that “the findings may not be given preclusive effect in any proceeding to establish any element of an Engle Plaintiff’s claim. The Court reserves judgment on whether the findings may have other preclusive effect.”

During Tuesday’s arguments, Carnes pointed to footnote 25 of the Schlesinger order, saying it seems to say something different.

“Constitutional issues aside … [the jury's] findings may prevent a defendant from arguing … that it never acted negligently, never engaged in a conspiracy to conceal, never placed a defective product on the market. In addition, the general findings … that cigarette smoking causes various diseases and illnesses and, in a proper circumstance, may be given preclusive effect, prevents Defendants from denying that cigarette smoking itself has been found to cause … aortic aneurysm, bladder cancer, coronary heart disease, and lung cancer.”

Issacharoff started to say that he would grant that the footnote says only that the jury findings “may” prevent a defendant from arguing certain things.

But Hull interrupted him, focusing on Schlesinger’s order before the footnote. “With respect to the elements of any of the Engle plaintiff’s claims … [Schlesinger] is saying I’m not going to give it preclusive effect at all,” she said.

“We can straighten this out,” Carnes said, then promised that the panel would not “just affirm” the district court’s opinion.

“We came here today to argue that we’re entitled to some preclusive effect,” Issacharoff said.

But, Carnes responded, the court needs specifics. The judges and Issacharoff then discussed that the jury’s findings are so general that it is impossible to say how they would apply to preclude the need to relitigate any specific issues in a specific plaintiff’s case.

In other words, how can a jury finding that the tobacco companies made false statements over the decades of their existence have a preclusive effect in the case of a plaintiff alleging damage from a specific false statement, when there’s no way to tell which facts the jury based its decision on?

“This puzzles me,” Carnes said, explaining that the Florida Supreme Court rejected two of the jury’s findings as being too general to support issue preclusion — which implies that the rest of the findings are sufficiently specific.

“But I can’t say that with a straight face,” he went on, when one of the findings essentially is that over the past several decades, tobacco companies made false statements. Carnes said that perhaps there could be a preclusive effect if the tobacco companies say they “never made a false statement.”

“If the district court said these facts have no preclusive effect, he erred,” Anderson said. But, Anderson added, “I don’t see how we can determine [when preclusion applies] … any more than the district court determines [this] when we don’t know what the facts will be.”

Acknowledging that the panel had allowed Issacharoff to argue far longer than his allotted time, Carnes told tobacco counsel Frey, “I think you’ve pretty much got your case decided and opinion worked out.”

Frey had other ideas. What issue exactly is before this court? he asked. Can the preclusive findings be used merely to establish elements of a claim — for example, general negligence — or can they be used more specifically in regard to the specific claims of individual plaintiffs such as causation and damages?

Launching a hypothetical in response, Hull asked, would your clients be able to say they used reasonable care?

“We would not be able to say that we never were negligent,” Frey said. “We should be able to say that we were not negligent with respect to the design of the specific filter the plaintiff smoked.”

“That’s the issue that is before you today,” he went on. “Can a plaintiff simply say negligence is established?”

With more than 4,000 cases pending, Frey went on, it is important to know the rules.

So you want us to say these elements don’t establish a plaintiff’s claim? Anderson asked.

Hull answered him, saying the elements could be used as proof. In other words, she said, cigarettes cause cancer, but you can’t use the preclusion to say they caused a particular plaintiff’s cancer.

Issacharoff, in a lengthy rebuttal largely propelled by questions from the panel, acknowledged that the preclusions would not provide “complete proof of any element.” But he pointed out that he was concerned about a jury instruction on the issue.

“If I can agree with Mr. Frey,” he said, the Florida Supreme Court meant to say that certain things — the pathologies associated with tobacco, its addictive qualities, tobacco company conduct such as concealment of health information — don’t have to be proven again. Of course, he added, plaintiffs will have to show specifics regarding their own use of tobacco in order to prove their cases.

“What cannot stand is this idea that the federal court says ‘we disregard all of these findings generically,’” he said.

At the conclusion of the arguments, Carnes leaned back in his chair. “You did a good job,” he told the lawyers.

The case is Brown v. R.J. Reynolds Tobacco Co., 08-16158.
Janet L. Conley
Fulton County Daily Report
January 27, 2010

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