The WHO International Conference On

The WHO International Conference on

Global Tobacco Control Law:

Towards a WHO Framework Convention on Tobacco Control

7 to 9 January 2000, New Delhi, India

Paper

The Prospects for Globalizing Tobacco Litigation

Author

By Roberta B. Walburn

Global Health Leadership Senior Fellow

World Health Organization, Tobacco Free Initiative

This paper is commissioned by, and produced for the World Health Organization, Geneva

I.INTRODUCTION

In recent years, news of litigation against the tobacco industry has captured headlines and attention around the world. In particular, multi-billion dollar settlements with state Attorneys General in the United States have led to much discussion and some litigation in other countries against the tobacco industry. The question naturally arises: what are the prospects for globalizing tobacco litigation?

Traditionally, large-scale and large-stakes litigation has been viewed as a U.S. phenomenon. However, the world -- in this era of globalization and instantaneous Internet communications -- is changing. As a commentator for the New York Times wrote recently:

[I]f you want to understand the post-Cold War world you have to start by understanding that a new international system has succeeded it -- globalization. . . . It is a complex system, with the final act still not written.[1]

The tobacco industry, too, is changing. Increasingly, a small number of multinational tobacco companies are controlling markets around the world, and increasingly these multinationals are focused on emerging markets. The prevalence of smoking is declining in most high-income countries, but increasing in developing countries.[2] Until recently, cigarette-caused death and disease mainly impacted rich countries. This is rapidly shifting, and by 2020 it is predicted that seven of every 10 people killed by smoking will be in low-and middle-income countries.[3]

Many factors are contributing to this shift in global markets, including trade liberalization. The shifting global focus also comes at a time when the multinational tobacco companies are under increasing attack in their home bases from litigation and regulation -- particularly in the United States -- and as new document disclosures detail how tobacco companiesbuilt and maintained their market in the United States through decades of wrongful conduct.

These disclosures have led to calls from the public health community for litigation against the tobacco industry as one method of promoting tobacco control. For example, more than 60 health ministers, legislators, and other senior policy makers from thirty countries and six international organizations met in Washington, D.C. in March 1999 at the International Policy Conference on Children and Tobacco and adopted, as one policy recommendation, “Hold tobacco companies accountable for past wrongdoing through litigation or other action. . . .” Similarly, the American Medical Association stated in 1995 that, “Physicians and the public should support legal action against the tobacco industry to recover billions of dollars in excess medical costs from tobacco-related diseases. . . “ and that, “All avenues of individual and collective redress should be pursued through the judicial system.” [4]

To date, the vast majority of tobacco litigation has taken place in the United States. In fact, tobacco litigation began in the United States more than four decades ago -- in 1954. For more than 40 years, the tobacco industry did not lose a single case in the United States. This provides a sober lesson for potential litigants in other countries. The prospect of tobacco litigation offers the potential of enormous public health benefits -- but also daunting challenges.

The U.S. experience in tobacco litigation cannot -- and should not -- be blindly exported to other countries. The decades of U.S. litigation, however, provide a number of lessons -- of failures and of successes -- that deserve consideration. In the end, the unique situation in each country must provide the ultimate guidance, and decisions to undertake tobacco litigation must be made only after an in-depth due diligence inquiry about the facts and law in a particular jurisdiction. This paper does not provide recommendations or advice, but, instead, attempts to set forth some starting points for analysis.

If tradition were a guide, tobacco litigation would not successfully take hold around the world and the litigation would remain a U.S. phenomenon. What the new millennium will bring in this era of globalization, however, is a more interesting -- and open -- question.

II.CASE STUDIES

A. Litigation in the United States

1. Historical Background

Tobacco litigation in the United States began 45 years ago, in 1954, and has been virtually continuous since that time. For most of that period, more than four decades, the tobacco industry did not lose a single case and did not pay one penny in damages to any plaintiff. Not until the mid-1990s -- with the revelations of millions of pages of documents forced from the files of the tobacco industry and with the framing of different types of legal theories that focused on the conduct of the tobacco industry-- did litigation in the United States achieve some dramatic successes.

One reason for the U.S. tobacco industry’s historical -- and unparalleled -- success has been its willingness to devote virtually unlimited resources to defeating its adversaries and the industry’s ferocity in employing scorched-earth tactics in litigation. One commentator characterized the tobacco industry’s litigation strategy as “unique in the annals of tort litigation.”[5] This commentator wrote, “The industry saw its very existence threatened and responded in an uncompromising fashion.” [6] As one tobacco industry lawyer candidly wrote:

[T]he aggressive posture we have taken regarding depositions and discovery in general continues to make these cases extremely burdensome and expensive for plaintiffs’ lawyers, particularly sole practitioners. To paraphrase General Patton, the way we won these cases was not by spending all of [RJR]’s money, but by making that other son of a bitch spend all of his.[7]

2.The First Wave of Tobacco Litigation

The history of tobacco litigation in the United States is usually summarized in three waves.[8] The first wave, consisting of personal injury suits by individual smokers, began in the 1950s in the wake of the publication of several scientific studies which sounded grave warnings on the health hazards of smoking.[9] In this first wave of litigation, the tobacco industry “hotly contested the causal linkage between smoking and lung cancer.”[10] The tobacco industry also contended that the health risks of smoking were not foreseeable, and therefore, the industry argued, the industry did not have sufficient information about the risks to research those risks and warn consumers.[11] This was before the landmark report of the U.S. Surgeon General in 1964 which concluded that smoking caused lung cancer in men and before the Surgeon General’s warnings were placed on cigarette packages in the United States in 1966.

3. The Second Wave of Tobacco Litigation

The second wave of cigarette litigation, also composed of individual personal injury suits, began in the 1980s.[12] In the wake of the 1964 Surgeon General’s report and the federally-mandated warning label on cigarettes, the tobacco industry began arguing that the hazards of smoking were “common knowledge” and, the industry argument went, smokers who continued to smoke were merely exercising their “freedom of choice.” [13] Thus, the tobacco companies, not without a certain audacity, seamlessly shifted their battle cry from the first wave of litigation -- “smoking doesn’t cause cancer” -- to their battle cry in the second wave of litigation -- that it was “common knowledge” that smoking causes cancer. (Even while making this “common knowledge” argument, the tobacco companies themselves continued to deny for decades that it was scientifically proven that smoking caused any disease.)

4.The Third Wave of Tobacco Litigation

The third wave of tobacco litigation began in 1994. In this wave, the fundamental nature of the claims against the tobacco industry changed. No longer was the litigation limited to individual claims by individual smokers. For the first time, state governments, through their Attorneys General, sued the tobacco industry seeking wide-scale injunctive relief and recovery, inter alia, of the states’ costs for medical care for smokers. In addition to states, private third-party payers of medical costs sued the tobacco industry to recover the costs of treating persons with smoking-caused diseases. Large class action suits on behalf of smokers also were filed, in addition to continuing cases brought by individual smokers.

This third wave of litigation was ignited by new revelations in 1994 about the tobacco industry’s conduct. These included hearings conducted by the U.S. Congress and disclosures from the U.S. Food and Drug Administration (FDA). In addition, secret documents from the internal files of the tobacco industry were disclosed by a paralegal who formerly worked for a law firm representing a tobacco company. These documents began to open the door on the internal workings of the tobacco industry. The Journal of the American Medical Association (“JAMA”) devoted an issue to analyses of these internal tobacco company documents, and stated:

We think that these documents and the analyses merit the careful attention of our readership because they provide massive, detailed, and damning evidence of the tactics of the tobacco industry. They show us how this industry has managed to spread confusion by suppressing, manipulating, and distorting the scientific record. They also make clear how the tobacco industry has been able to avoid paying a penny in damages and how it has managed to remain hugely profitable from the sale of a substance long known by scientists and physicians to be lethal.[14]

These documents also contained disclosures on the role of industry attorneys in fostering scientific research that perpetuated a “controversy” as to whether smoking caused disease and in suppressing scientific research that established the causal link.[15]

These initial document disclosures in 1994 were dramatic. As it turned out, however, these documents were to be the tip of the iceberg of remarkable revelations from the long-hidden files of the tobacco industry. As this third wave of litigation proceeded, intense pre-trial discovery proceedings forced the production of more documents from the tobacco industry. By 1998, approximately 35 million pages of documents were produced. These documents -- this new evidence in the words of the tobacco industry itself -- formed the factual predicate for the successful outcomes in this wave of litigation. The focus of the litigation became not merely the product -- cigarettes -- but the unlawful conduct of the tobacco industry.[16]

a.Class Actions and Individual Personal Injury Suits in the Third Wave

There was an explosion of class action and individual personal injury suits brought by smokers in the third wave of litigation. Cases also were brought by non-smokersalleging harm from environmental tobacco smoke.

The biggest class action suit was Castano v. American Tobacco Company. This was a nationwide class action filed in 1994 in New Orleans, La., on behalf of all U.S. smokers. Eventually, this case was de-certified,[17] as current U.S. court opinions have made it difficult to sustain class actions in a personal injury setting such as tobacco. One class action, however, has been proceeding: a class action filed on behalf of smokers in the state of Florida. Jury selection on this case began in July 1998. One year later, in July 1999, the jury returned a verdict in the liability phase of the trial. The jury found that:

Smoking causes wide array of diseases, from lung cancer to pancreatic cancer to cerebrovascular disease.
Cigarettes are addictive or dependence producing.
Cigarettes are defective and unreasonably dangerous.
The tobacco companies made false statements with intention of misleading smokers.

The tobacco companies entered into an agreement (i.e. a conspiracy) to misrepresent information relating to the health effects of smoking or the addictive nature of smoking with intention that smokers and the public rely to their detriment.
The tobacco companies breached implied and express warranties.
The tobacco companies failed to exercise the degree of care which a reasonable cigarette manufacturer would exercise under like circumstances (i.e. negligence).
The tobacco companies engaged in extreme and outrageous conduct, or with reckless disregard, with the intent to inflict severe emotional distress.
The conduct of the tobacco companies rose to a level that permitted an award of punitive damages.

The jury’s verdict in Florida came in the first phase of the trial and addressed only issues of the tobacco industry’s liability. The issue of damages is following in subsequent proceedings. Notwithstanding the volume of cases filed, there have been relatively few trials in the decades of litigation against the tobacco industry in the United States, and the verdicts in these trials have been split between victories for the plaintiffs and victories for the tobacco industry -- even in recent cases. For example, just two days after the dramatic verdict in the Florida class action, a jury in Louisiana decided for the tobacco industry in an individual smoker case. Only five juries have awarded damages against the tobacco industry in traditional personal injury cases -- twice in Florida, and once each in New Jersey, Oregon, and California. The two Florida verdicts and the New Jersey verdict were overturned on appeal. The Oregon verdict of March 1999 ($80.3 million to a family of a smoker who died of lung cancer, reduced to $32.8 million by the trial judge) and the California verdict of February 1999 ($51.5 million to a woman with lung cancer, reduced to $26.5 million by the trial judge) are both being appealed.

b. State Attorneys General Suits in the Third Wave

In 1994, the States of Mississippi and Minnesota, acting through their Attorneys General, were the first to file lawsuits against the tobacco industry in the United States. Within a few years, almost every state joined in the litigation by filing its own lawsuit. These were direct law enforcement actions by the states against the tobacco industry; the states -- not individuals or groups of smokers -- were the named plaintiffs. The states asserted a wide array of legal theories based on the common law and on statutes. In general, however, the main legal theories rested upon consumer protection statutes, antitrust statutes, and racketeering statutes. The relief sought by the states included monetary damages for expenditures made by the states to treat persons with smoking-caused disease, as well as other types of damages and wide-ranging injunctive relief.

All of the state cases resolved by settlement by the end of 1998. The first states with trial dates -- Mississippi, Florida, Texas, and Minnesota -- settled individually, either prior to trial or prior to jury verdict. The rest of the states settled as a group in November 1998. The group settlement provides for $206 billion in payments over the first 25 years to the 46 settling states and five territories. Cigarette billboard advertising and advertising on public transportation, stadiums, shopping malls, and video arcades are banned. Cartoon characters also are banned from advertising. There is an end to the sale and distribution of merchandise with cigarette brand names. Promotions are limited to one event per year for each tobacco company. Three industry trade groups are disbanded. (Decisions on the use of the settlement proceeds will generally be made by each state legislature. There are fierce battles in most states over the use of the funds, with the public health and tobacco control communities attempting to secure appropriate funding for tobacco control programs.)

A more detailed case study on one state’s litigation -- Minnesota -- appears below.

c. The Minnesota Tobacco Litigation

The Minnesota tobacco litigation was the most extensively litigated state Attorney General tobacco case. The State of Minnesota focused intensive efforts on achieving the production of documents from the files of the tobacco industry, eventually obtaining approximately 35 million pages of documents which became accessible to all other litigants. In addition, the Minnesota case proceeded to a four-month trial and settled only on the eve of jury deliberations. A detailed review of the Minnesota tobacco litigation is instructive as an example of the potential achievements in tobacco control which can be accomplished through litigation.

I. Overview and Legal Theories

Minnesota filed its legal action against the tobacco industry in August 1994.[18] Minnesota was joined as a co-plaintiff by Blue Cross and Blue Shield of Minnesota (Blue Cross), the state’s largest private third-party payer of health care costs.[19] The legal theories upon which the case was based were as follows:

Undertaking a special duty -- Factually, this cause of action was predicated on the tobacco industry’s public statements -- starting with “The Frank Statement” in 1954, which ran as a full-page advertisement in major U.S. cities -- in which the industry promised to undertake efforts to research issues relating to smoking and disease and to report the research findings to the public. Legally, this cause of action was a common law claim, based upon the fundamental tort law premise that “one who assumes to act, even though gratuitously, may thereby become subject to the duty of acting carefully, if he acts at all.”[20] The State and Blue Cross alleged that the tobacco industry assumed a special responsibility and duty to those who advance and protect the public health through the tobacco industry’s public statements that: the industry accepted an interest in the public’s health as a basic and paramount responsibility; the industry would aid and assist the research effort into all phases of tobacco use and health; the industry would continue research and all possible efforts until all the facts were known, and the industry would provide complete and authenticated information about cigarette smoking and health.