Legal Issue

Whether a jury’s punitive damages award in a tobacco class action lawsuit was valid, when a ruling vacating the award relied on tobacco settlement agreements that barred their use in private lawsuits.

Overview

In this landmark class action suit on behalf of 700,000 Florida smokers, the plaintiffs alleged fraud and conspiracy on the part of the tobacco companies to conceal the damaging effects of smoking.  The trial court found for the plaintiffs and awarded a record $145 billion punitive damages award against the principal domestic tobacco companies – the largest punitive damages award in history.  On appeal, however, the three-judge Third District Court of Appeals set aside the verdict and decertified the class, reversing its own earlier approval of certification.

In June 2004, the Tobacco Control Legal Consortium joined in an amicus brief prepared by its Massachusetts affiliate, the Tobacco Control Resource Center, in support of Plaintiffs.  The brief argued that the jury’s punitive damages award should be upheld because the Court of Appeals incorrectly relied on the 1997 Florida Settlement Agreement and the 1998 Master Settlement Agreement in reversing the jury’s award, when both agreements explicitly bar the use or consideration of them in any private lawsuit. We also argued that decertifying the class would create a de facto denial of remedies for almost all class members for two reasons: (1) the tobacco industry’s litigation tactics purposely and needlessly increase litigation costs in ways that effectively prevent individual smokers from litigating their claims, and (2) even if class members could find counsel to represent them, decertifying the class would lead to a flood of cases retrying the same liability issues and undermining judicial efficiency and resources.

Outcome

The Florida Supreme Court upheld the Court of Appeals’ reversal of the unprecedented punitive damages award and dismantled the class. The Court let the jury’s finding of fraud stand, but required Florida smokers to assert their claims individually, giving them one year to file new lawsuits. Importantly, however, the decision allowed the smokers’ claims already proven to be carried over to their individual cases, thus preserving most of the gains that had been made in the twelve years of Engle litigation. Claimants still bear the burden of proving that they smoked Defendant’s cigarettes, that the smoking caused their individual illnesses, and (if they allege fraud) that they personally relied on Defendant’s fraudulent claims.