Tobacco Pact Sets Record, Raises Issues

By Daniel Shaw, Don J. DeBenedictis, and Marty Graham
(Los Angeles Daily Journal)

After Friday's landmark $360 billion settlement between tobacco companies and anti-smoking forces, several questions remain. The most pressing for lawyers, however, may be whether the pact is constitutional.

Under the agreement - which must be approved by Congress and the president - smokers would see dire new warnings on cigarette packs, get free medical help to kick the habit and be inundated with nationwide anti-smoking advertising.

In return, tobacco companies and investors would get relief from the uncertainty posed by hundreds of pending lawsuits. The deal is to settle 40 state lawsuits that seek to recover Medicaid money spent treating sick smokers and 17 class actions against the industry. Individual smokers' lawsuits that are already pending in court are not expected to be affected, unless those people choose to join the settlement

Of concern to lawyers, the pact would take away the ability of individual smokers to sue for punitive damages for any past misconduct by tobacco companies. Instead, as punishment for all past wrongdoing, the tobacco industry would pay $50 billion into a fund. In addition all class-action lawsuits against the industry would be banned.

Several legal scholars said the settlement terms could raise constitutional issues, depending on what is in the fine print and what if any, changes Congress, makes to the agreement. The major potential issue, said one constitutional expert, is whether the settlement will limit due process.

Erwin Chemerinsky, constitutional law professor at the University of Southern California, said, "Until we see exactly how due process is limited, it's hard to evaluate the due process question."

Los Angeles attorney Suzelle Smith, a partner with Howarth & Smith, which represents a group of plaintiffs – as well as the widow of a man who portrayed the Marlboro man in ads and died of lung cancer – in a suit against the cigarette makers, said she was particularly pleased that the tobacco companies agreed to pay $60 billion in punitive damages.

"We negotiated long and hard to get the best deal for the public and the punitive damages were a breaking point for a long time," she said. "Much of that money will be used to fight the terrible problem of teen smoking and to educate people to the dangers of smoking."

Smith is among the attorneys involved in the class-action group that arose out a class action filed in New Orleans in 1994. Smith credited the New Orleans suit, known as the Castano Plaintiff Group after the lead plaintiff, Diane Castano, as the single largest force in driving the tobacco companies to the negotiation table.

"It's fair to say that without Castano, the discovery we've done and the momentum we've created, none of this would have occurred," she said. "If it hadn't been for the plaintiffs' lawyers getting out there and suing, the end of smoking addiction would not be in sight"

One unsettled question as of Friday afternoon is which attorneys will be paid – and how. Lawyers' fees and cost are not included in the settlement and will be negotiated after the settlement is approved, said Smith.

"It would be a tragedy if the lawyers who initiated this suit and got the public aboard, and brought the tobacco companies to the table, got sold down the river," she said.

The agreement allows for the industry to pay out $360 billion over 25 years, most of it for anti-smoking campaigns and public health efforts. Of that sum, the agreement would allocate $4 billion a year in compensatory damages into a fund that would pay any smoker who won a suit

The settlement is also significant because it is thought to be the largest verdict or settlement ever reached. The amount dwarfs such well-known previous settlements for asbestos, silicone breast implants ($4.23 billion from 60 manufacturers payable over 30 years), the Dalkon Shield, and the Bhopal, India, chemical spill ($470 million). It is also larger than such record verdicts as the $22 billion against the estate of Philippine President Ferdinand Marcos, the $10.5 billion awarded to Pennzoil against Texaco, and the $5 billion won by Alaskans for the Exxon Valdez oil spill.

Smokers Win Ruling to Bring Class-Action Suit; Millions get approval to join complaint seeking damages for health problems.

By Myron Levin
(Los Angeles Times)

A federal judge on Friday granted class certification to tens of millions of smokers in a lawsuit against cigarette makers, creating what may be the largest class action ever certified in U.S. legal history.

A national consortium of plaintiff lawyers won the key ruling when U.S. District Judge Okla Jones II in New Orleans cleared them to proceed on behalf of smokers in the United States and its territories who allegedly became addicted to nicotine.

The long-awaited ruling did not endorse the suit's central contention: that cigarette makers have long known their products are addictive but have concealed that information and manipulated nicotine levels to keep smokers hooked.

But by granting class certification to a vast number of current and former smokers--even those who have not been diagnosed with smoking-related ailments--the ruling raises the prospect of monumental damages should the plaintiffs ultimately prevail.

The decision makes the lawsuit "the largest class action ever certified in the history of the law," said Don Howarth of the Los Angeles law firm of Howarth & Smith, one of the plaintiff firms allied in the case.

"We're delighted," Howarth said. "This is absolutely 95% of what we wanted. It gives us the right to take on, in one action, the tobacco industry."

Industry officials voiced disappointment with the ruling and said they will appeal.

The two-year-old lawsuit is known as the Castano case, after Dianne A. Castano, one of four named plaintiffs and the widow of Peter Castano, a New Orleans lawyer who died of lung cancer that allegedly was caused by smoking.

Defendants include the Tobacco Institute and the seven biggest U.S. tobacco companies, who maintain that smoking is not addictive and those who want to quit can do so.

Industry lawyers had adamantly opposed class certification, contending, among other things, that the sheer number of potential claimants would make the case unmanageable.

"The court's decision to allow Castano to go forward as a class action, in our opinion, is inconsistent with class certification guidelines," R.J. Reynolds Tobacco said in a statement.

"If this case proceeds and is not reversed on appeal, it will prove to be an unwieldy burden on the court system."

Philip Morris Cos. said it also will appeal, but noted that Jones resolved some issues in the industry's favor--including rejecting an industry-paid fund to monitor smokers' health and fund their medical care.

And Philip Morris said that even if the industry is found liable, smokers will still have to prove damages on an individual basis.

On Wall Street, Philip Morris stock dipped $1.50 to $60.25, while RJR Nabisco, parent of R.J. Reynolds, fell 6.3 cents to $5.625. American Brands, parent of American Tobacco Co., dipped 12.5 cents to $37.50, while Loews Corp., owner of Lorillard Tobacco, was unchanged at $97.50.

Since the 1950s, cigarette makers have repulsed scores of lawsuits, preserving their record of never paying a nickel in settlements or judgments to those claiming injuries from smoking.

Juries generally have agreed that smokers accepted the risk, and armies of defense lawyers have vastly outmanned and outspent their opponents.

To overcome these obstacles, plaintiff attorneys have seized on the addiction argument and sought to even the odds through class-action claims.

A Florida law firm currently has two class actions pending in Florida state court: one claiming injuries to flight attendants from second-hand smoke, and the other on behalf of injured smokers generally.

However, the New Orleans case involves a powerhouse alliance of about 60 law firms, each committed to spending $100,000.

In his 34-page ruling, Jones said the class of "nicotine-dependent" smokers will include all smokers medically diagnosed as nicotine-dependent, as well as smokers who have been warned by their doctors that smoking is dangerous but who have not quit.

Invoking the Robert Frost poem, "The Road Not Taken," Jones acknowledged he was embarking "on a road certainly less traveled, if ever taken at all."

"This will be a daunting task with long, difficult days ahead," the judge said. "However, the court believes the resolution of these issues now will alleviate the constant need for duplicative resolution of these issues later in hundreds of courtrooms around the nation, a task unparalleled in scope."