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Tobacco Litigation: Smoke, Mirrors and Public Policy

Published online by Cambridge University Press:  24 February 2021

Arthur B. LaFrance
Arthur B. LaFrance*
Affiliation:
Dartmouth College; Yale Law School, Lewis & Clark Law School, Portland, Oregon
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Extract

My experience and reflections concerning tobacco litigation stem from representing the American Cancer Society in November of 1998,' when the State of Oregon asked Judge Anna Brown of the Circuit Court of Multnomah County in Portland to approve the settlement agreement reached between Oregon and the major tobacco manufacturers. The American Cancer Society inteivened in opposition. The agreement was a part of a multi-state settlement reached by forty-six state Attorneys Generals and the tobacco industry proposed to state courts during that same week and the ensuing weeks around the country. By October of 1999, the Master-Settlement Agreement (MSA) was approved by enough states that it was effectuated. Distributions pursuant to the agreement will begin in 2000 or 2001. Total disbursements over twenty years will exceed $240 billion, a huge amount of money by anyone's standards.

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Articles
Information
American Journal of Law & Medicine , Volume 26 , Issue 2-3: The Changing Face of Law and Medicine in the New Millennium , 2000 , pp. 187 - 203
Copyright
Copyright © American Society of Law, Medicine and Ethics and Boston University 2020

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References

1 In addition, the author has taught courses in healthcare delivery, and a seminar in bioethics, for nearly fifteen years. The author is also a member of The Board of Editors of the Oregon Healthlaw Manual, and has authored a casebook: Bioethics: Healthcare, Human Rights and the Law (1999).

2 The entire “Master Settlement Agreement” (or MSA) is available at the website of the National Ass'n of Att'ys Gen., Tobacco Documents: Master Settlement Agreement (last modified Mar. 1, 2000) <http://www.naag.org/tobac/index.html>. The same settlement is also available at a more comprehensive site maintained by Northeastern University, Tobacco Control Resource Center/ Tobacco Products Liability Project (visited Apr. 12, 2000) <http://tobacco.neu.edu>. An excellent, detailed analysis of the MSA can be found at the Northeastern University site. See The Multistate Master Settlement Agreement and the Future of State and Local Tobacco Control (Graham Kelder & Patricia Davidson eds., last modified Mar. 24, 1999) <http://tobacco.neu.edu/msa/msa_analysis.pdf>.

3 Specifically, the Oregon Division of the Northwest Chapter sought leave to intervene in Case No. 9706-04457, Circuit Court of Oregon, Multnomah County, in order to persuade Judge Brown to defer approving the MSA and, instead, appoint a referee to evaluate the scope and fairness of the proposed MSA. The Oregon rules on intervention and referees are similar to the Federal Rules. See OR. R. Civ. P. 62, 65 (providing for appointing referees); OR. R. CIV. P. 33 (outlining procedure for intervenors).

4 This article is based on a speech delivered at the first annual A.B.A.-A.L.I. Conference on Health Care Law and Litigation, at L'Enfant Plaza Hotel, Washington, D.C., Oct. 14, 1999. See Baggio, Amy & Lafrance, Arthur B., Tobacco Litigation: An Overview For The Year 2000, SE34 A.L.I.-A.B.A. 565(1999)Google Scholar.

5 See National Ass'n of Att'ys Gen., Press Release, CCO Settlement Proceeds to be Released to States, Tobacco Sales Down During First Year Since Settlement (Nov. 12, 1999). Florida, Minnesota, Mississippi and Texas settled their cases separately. See id.

6 See id.

7 See discussion, infra Part II.

8 See id.

9 There has been very little discussion of the appropriateness of litigation within—or as a means of setting—health policy. But see Donald W. Garner, Tobacco Wars and the New Minority, 2 J. Health Care L. & Pol'y 15, 31 (1998); Marc Galanter, Big Tobacco: Winning By losing, AM. Law., Jan.-Feb. 1999, at 55, 55.

10 For discussion of the “Medicaid” cases, see infra Part III. In addition to 46 states, the District of Columbia, and five territories (American Samoa, Guam, Northern Mariana Islands, Puerto Rico and the Virgin Islands) were also involved in this settlement. See National Ass'n of Att'ys Gen., Tobacco Document: State Attorneys General Who Have Agreed to Tobacco Settlement Proposal (last modified Apr. 21, 2000) <http://www.naag.org/tobac/tobagr.htm.>.

11 The author assumes the reader is familiar with the extent and gravity of the health problems caused by tobacco consumption. For the uninitiated, an introduction and orientation may be found in an excellent Symposium, Tobacco Regulation: The Convergence of Law, Medicine & Public Health, 25 WM. Mitchell L. Rev. 373 (1999). For a no holds barred view, see James A. Kushner, Tobacco Regulation, Litigation and the Proposed Mega-Settlement: America's Policy of Ethnic Cleansing, 27 Sw. U. L. REV. 673, 674 (1998). The pattern of corporate misconduct is not unique to tobacco; it certainly has characterized other industries such as lead and asbestos. See Ronald L. Motley & Anne McGinniss Kearse, Decades of Deception, Trial, Oct. 1999, at 46, 48.

12 See infra Part II.

13 See infra Part III.

14 See Justin Pope, Cigarette Cost Likely to Jump 22 Cents, Oregonian, Aug. 31, 1999, at Bl.

15 Litigation affecting the public interest is not new. Indeed, since Brown v. Board of Education, 347 U.S. 483 (1954) and the protean growth of 42 U.S.C. § 1983 (allowing actions by private citizens against state actors for violations of civil rights), public interest litigation has become commonplace. It is clearly appropriate for courts, particularly as class actions under Fed. R. Civ. P. 23. See generally Abraham Chayers, The Role of the Judge in Public Interest Litigation, 89 Harv. L. Rev. 1281 (1974). Even the most complex school or institutional litigation pales in complexity when compared to the scope and consequence of the tobacco companies' misconduct and the difficulty of proving that misconduct and assessing damages in a courtroom.

16 It was the problem of enforcement which caused the Supreme Court in Brown to modify its original mandate, and only order enforcement “with all due, deliberate speed.” See Brown, 347 U.S. at 301. Enforcing the MSA in 46 states, or even just in Oregon, may be equally as difficult, with far fewer resources and personnel.

17 For a discussion of the attempt to reach a federal, “global” settlement, see infra Part III. See generally Peter D. Enrich & Patricia A. Davidson, The Proposed National Settlement, 35 Harv. J. On Legis. 87, 87-88 (1998); Garner, supra note 9, at 15; Robert A. Levy, Tobacco Wars: Will the Rule of Law Survive?, 2 J. Health Care L. & Pol'y 45 (1998); Tucker S. Player, After the Fall: The Cigarette Papers, the Global Settlement and the Future of Tobacco Litigation, 49 S.C. L. REV. 311 (1997).

18 The history of asbestos litigation has been widely told, and parallels that of tobacco, including concealment of health dangers and the use of legislation to avoid liability. See Motley & Kearse, supra note 11, at 46-47. In the last two decades, the insurance industry has sought relief from medical malpractice liability through a package of legislative devices called, euphemistically, “tort reform.” See Kenneth D. Krantz, Tort Reform 1997-1998: Profits v. People, 25 Fla. ST. U.L. Rev. 161, 162 (1998). This story, too, has been widely told. Neither needs retelling here. The point is that these initiatives, by asbestos manufacturers and malpractice insurers, provide a well-traveled road map for the tobacco industry.

19 See Elsa F. Kramer, Waiting To Exhale: Tobacco Lawyers are Getting Burned by Damaging Industry Revelations. Can They Rise From the Ashes?, Res Gestae, May 1996, at 20. See generally Anne M. Payne, Annotation, Products Liability: Cigarettes and Other Tobacco Products, 36 A.L.R.5th 541 pt. III.B. (1996 & Supp. Sept. 2000) (tracking and analyzing the history of tobacco litigation cases).

20 See, e.g., Cipollone v. Liggett Group, Inc., 693 F. Supp. 208 (D.N.J. 1988), affd in part and rev'd in part, 893 F.2d 541 (3d Cir. 1990), affd in part and rev'd in part, 505 U.S. 504 (1992); Pritchard v. Liggett & Myers Tobacco Co., 134 F. Supp. 829 (W.D.Pa. 1955), rev'd, 350 F.2d 479 (3d Cir. 1965), amended by 370 F.2d 95 (3d Cir. 1966); see also Grinnell v. American Tobacco Co., 883 S.W.2d 791 (Tex. Ct. App. 1994), aff'd in pari and rev'd in part, 951 S.W.2d 420 (Tex. 1997), superceded by statute as stated in Sanchez v. Liggett & Myers, Inc., 187 F.3d 486, 490 (5th Cir. 1999).

21 See generally Gary L. Wilson & Jason A. Gillmer, Minnesota's Tobacco Case: Recovering Damages Without Individual Proof of Reliance Under Minnesota's Consumer Protection Statutes, 25 WM. Mitchell L. Rev. 567 (1999) (discussing the history of private litigants' efforts to get damages from the tobacco companies).

22 See Cipollone, 505 U.S. at 508-56.

23 Cipollone, 893 F.2d at 548-52, 574-77.

24 See Cipollone, 505 U.S. at 508-15.

25 H See id. at 517-25.

26 See id. at 524-31.

27 For example, see the Amended Complaint in one of the few successful cases, Henley v. Philip Morris, Inc., No. 995172 (Cal. App. Dep't Super. Ct. Feb. 9, 1999).

28 See id.

29 Williams-Branch ex rel. Estate of Williams v. Philip Morris, Inc., No. 9705-03957 (Or. Cir. Ct., Multnomah County Mar. 30, 1999).

30 See Verdict Form for Phase II, Engle v. R.J. Reynolds Tobacco Co., No. 94-08273 CA (22) (Fla. Cir. Ct., 11th Cir. filed April 7, 2000).

31 See Carol M. Bast, At What Price Silence: Are Confidentiality Agreements Enforceable?, 25 WM. Mitchell L. Rev. 627, 628 & n.6 (1999) (discussing the case of Merrell Williams, a former paralegal at the firm representing Brown and Williamson Tobacco Corp.).

32 See id.

33 See id.

34 See id.

35 See Caminiti, Paul, An Industry Perspective and the Unique Role of the Liggett Group, 25 WM. Mitchell L. Rev. 447, 449-50 (1999)Google Scholar.

36 See id. at 450.

37 See id. at 451.

38 See id. at 452-53.

39 Also significant, Jeffrey Wigand, vice president for research and development of Brown & Williamson, “blew the whistle” on Brown & Williamson, analyzing leaked documents and publicly exposing the tobacco companies' conspiracy of silence. Wigand's conduct also challenged the validity of confidentiality agreements. See Bast, supra note 34, at 682-90.

40 See Michael V. Ciresi et al., Decades of Deceit: Document Discovery in the Minnesota Tobacco Litigation, 25 WM . Mitchell L. Rev. 477, 478-79 (1999). Eventually, 35 million documents would be extracted from the tobacco companies. See Jamey Pregon, Casualties of the War on Tobacco: Can Farmers Survive the Anti-Tobacco Onslaught?, 3 Drake J. Agric. L. 465, 466-67(1998).

41 Those who retain any doubt as to the tobacco companies' decades-long pattern of shameful and shameless misconduct have only recently arrived on the planet. In addition to the recitations of facts in the Cipollone, Williams and Henley cases, see Player, supra note 17, at 311-12.

42 The proliferation of private suits was denominated “floodgate” litigation. See Pregon, supra note 40, at 480.

43 The pattern of deliberate fraud also makes class actions possible. See, e.g., R.J. Reynolds Tobacco Co. v. Engle, 672 So. 2d 39, 41 (Fla. Dist. Ct. App. 1996) (certifying a class action in a products liability case against tobacco companies, but limiting it to Florida citizens). But see Barnes v. American Tobacco Co., 161 F.3d 127, 149 (3d Cir. 1998) (affirming summary judgment in favor of tobacco company defendant, in an appeal by smokers asserting multiple claims); Small v. Lorillard Tobacco Co., 94 N.Y.2d 43, 47 (1999) (decertifying class and dismissing certain claims).

44 See Motley & Kearse, supra note 11, at 46-47.

45 See id.

46 See generally Carol A. Crocca, Annotation, Validity. Construction, and Application of State Statutory Provisions Limiting Amount of Recovery in Medical Malpractice Claims, 26 A.L.R.5th 245 (1995 & Supp. 1999) (discussing and analyzing various state medical malpractice damage limitation provisions).

47 The authorities cited, infra note 49, describe the contours and course of the State Medicaid litigation. One commentator wrote “[t]here is neither legal nor moral justification for industry payments to reimburse state Medicaid programs.” Levy, supra note 17, at 51.

48 See cases cited infra note 87.

49 See generally Frank J. Vandall, The Legal Theory and the Visionaries That Led to the Proposed $368.5 Billion Tobacco Settlement, 27 Sw. U.L. Rev. 473 (1998) (discussing the three waves of tobacco litigation between 1960 and 1994). In addition, the State actions had the important advantage of not depending on individual reliance upon false advertising or causation of harm to individuals. See Wilson & Gillmer, supra note 21, at 570; Tiffany S. Griggs, Comment, Medicaid Reimbursement from Tobacco Manufacturers, 69 U. Colo. L. Rev. 799, 813-14 (1998).

50 For a brief account of the Minnesota case, one of the few cases going to trial before a jury, see Michael V. Ciresi, Fighting Big Tobacco—and Winning Justice, Trial, Apr. 1999, at 84.

51 The States were represented by private attorneys; 30 of them by a single attorney, Richard Scruggs. For some of the flavor of the negotiations, see The Tobacco Settlement: Practical Implications and the Future of the Tort Law, 67 Miss. L.J. 847 (1998). Among the subjects the panel discussed was the enormity of the fees collected by the attorneys representing the states. See id. at 857-62.

52 See Saundra Torry, D.C. to Sign Proposed Tobacco Deal, Wash. Post, Nov. 20, 1998, at Al; C. Everett Koop & David Kessler, Desperate for a Deal, Wash. Post, Nov. 20, 1998, at A29.

53 The MSA ran 134 single-spaced pages when first published. See National Ass'n of Att'ys Gen., supra note 2; see also The Ward, Kershaw and Minton Environmental Symposium: “Up in Smoke: Coming to Terms with the Legacy of Tobacco," 2 J. Health Care L. & Pol'y 167, app. HI at 167-74 (1998) (summarizing the agreement).

54 An excellent early critique of the MSA was done by the Tobacco Control Resource Center, Inc., at Northeastern University, the leading activist opposition to tobacco sale and consumption in the U.S. See The Multistate Master Settlement Agreement and the Future of State and Local Tobacco Control (Graham Kelder & Patricia Davidson eds., last modified Mar. 24, 1999) <http://tobacco.neu.edu/msa/msa_analysis.pdf>.

55 Few of the criticisms in the present article are unique to Oregon. Rather, they are inherent in the MSA itself, in whatever state it was offered. See id.

56 Indeed, the tobacco companies were nationally able to amortize the cost of the MSA by raising, within months of the settlement, the price of a pack of cigarettes 22 cents. See Pope, supra note 14, at Bl. The Attorney Generals' efforts amounted to no more than that.

57 See Proposal to Put Tobacco Money in Health Plan Draws Criticism, Oregonian, Dec. 9, 1999, at C8.

58 See MSA, supra note 2, at § I(pp).

59 See id. § I(oo).

60 See id. § I(nn).

61 See id. § I(pp)(2)(A) (allowing any private litigant to bring a claim “to the extent that any such person or entity is seeking relief on behalf of or generally applicable to the general public... .”).

62 See id. § I(nn)(I)(C) (allowing “any comparable claims that were, could be or could have been asserted now or in the future in those actions or in any comparable action in federal, state or local court. . . .”).

63 See id. § I(oo).

64 All of this may seem terribly theoretical. A concrete instance arose within months of the MSA being entered in Oregon. As noted, the Williams case went to judgment, totaling $80 million in an award for the plaintiff. That was cut approximately in half by Judge Brown. See discussion supra Part II. The tobacco companies then invoked the MSA against that award, citing a state statute which requires that about half of any punitive judgment award go to the State. Res judicata was attributed to the MSA. This is only the beginning, one may assume, of countless ways in which the MSA will be invoked in subsequent litigation brought by people who were not before the court, concerning claims not submitted to it.

65 “Never in the field of human conflict was so much owed by so many to so few.” Prime Minister Winston Churchill, Speech Before the British House of Commons (Aug. 20, 1940) (tribute to the Royal Air Force after the Battle of Britain).

66 An excellent account of the negotiating dynamics behind the MSA appears in Alison Frankel, After the Smoke Cleared: the Inside Story of Big Tobacco's $206 Billion Settlement, AM. Law., Jan.-Feb. 1999, at 48.

67 Among other things, Part III of the MSA prohibits youth targeting, bans the use of cartoons, limits tobacco brand name sponsorships, bans youth access to free samples and bans on gifts to underage persons based on proofs of purchase. See MSA, supra note 2, at § 111(a), (b), (c), (g), (h).

68 See id. § VI.

69 See id. § III.

70 See id. at Exhibit O (the “Model State Fee Payment Agreement").

71 Indeed, the week after the MSA was announced, the tobacco companies joined together to raise the price of a package of cigarettes 22 cents. This modest mark-up likely goes a long way toward neutering the settlement.

72 See Cigarette Shipments Down, Oregonian, Nov. 26, 1999, at A9.

73 For comparison, see the Attorney General's comments in Frankie Sue Del Papa, Tobacco Settlement in Nevada's Best Interests, Nev. Law., Dec. 6, 1998, at 15, 15.

74 See MSA, supra note 2, at § VI(b) (requiring that “each Original Participating Manufacturer shall severally pay its Relative Market Share of $25,000,000 to fund the Foundation").

75 See id. § XVII(d), Exhibit O.

76 Within days, multi-billion dollar payments to law firms were being announced: $8 billion to one firm in South Carolina; $3 billion to Texas' attorneys, $3.4 billion in Florida; $1.43 billion in Mississippi. See Frankel, supra note 66, at 54. These payments ranged from 15% to 30% of the total recovered on behalf of their respective states. The Texas lawyers had requested $25 billion. See id.

77 See Enrich & Davidson, supra note 17, at 87-88; Player, supra note 17, at 389; Vandall, supra note 49, at 483-85; see also Levy supra note 17, at 45 (sharply criticizing the proposed national settlement); Wendy E. Parmet, Stealth Preemption: The Proposed Federalization of State Court Procedures, 44 VlLL. L. REV. 1 (1999).

78 See Complaint, United States v. Philip Morris, Inc., Civ. No. 99-2496 (GK) (D.D.C. filed Sept. 22, 1999).

79 See Garner, supra note 9, at 15.

80 See Complaint, Philip Morris, Inc., Civ. No. 99-2496 (GK); Robert H. Bork, Tobacco Suit is Latest Abuse of the Rule of Law, Wall ST. J., Sept. 23, 1999, at A22; David S. Cloud & Gordon Fairclough, U.S. Sues Tobacco Makers in Massive Case, Wall ST. J., Sept. 23, 1999, at A3; Marc Lacey, Tobacco Industry Accused of Fraud in Lawsuit by U.S., NY Times, Sept. 23, 1999, at Al .

81 42 U.S.C. §§ 2651-53 (West 1999) (Count I of the Complaint).

82 Id. §1395y(b)(2)(B)(ii) & (iii) (Count II of the Complaint).

83 18 U.S.C. §§ 1961-68 (Count III of the Complaint).

84 See Clifford E. Douglas, Why the Federal Government Should Sue the Tobacco Industry (visited Apr. 12, 2000) <http://tobacco.neu.edu/Extra/hotdocs/durbin.htm>.

85 See 42 U.S.C.A. §§2651.

86 See id. §1395y(b)(2)(B)(ii).

87 See 18 U.S.C. § 1964. The Racketeer Influenced Corrupt Organization Act (RICO) permits private plaintiffs, such as unions to sue for costs to their benefit programs from tobacco consumption. See SEIU Health & Welfare Fund v. Philip Morris, Inc., 83 F. Supp. 2d 70, 90 (D.D.C. 1999); Drugs and Devices: Unions May Sue Tobacco Companies Under RICO. Federal District Court Rules, 9 Health Law Rep. (BNA) No. 2, at 52 (Jan. 13, 2000). But see Local 17 Health & Benefit Fund v. Philip Morris, Inc., 191 F.3d 229, 234-42 (2d Cir. 1999) (finding that a RICO action did not exist as the tobacco manufacturers did not proximately harm the benefit funds); Local 734 Health & Welfare Trust Fund, Int'l Brotherhood of Teamsters v. Philip Morris, Inc., 196 F.3d 818, 822-28 (7th Cir. 1999) (affirming district court decision disallowing welfare trust funds' RICO claims against tobacco manufacturers).

88 See Cloud & Fairclough, supra note 80. This liability could be quite significant since RICO does not limit how far back profits can be reached. See id.

89 See supra note 30.

90 For these reasons, the argument that the federal antitrust action against Microsoft proves that the Department of Justice can defeat powerful corporations fails. Microsoft had neither political experience nor allies.

91 See Daniel Kamenskes, Note, Will Congressional Action Go Up in Smoke? Overcoming Obstacles in Granting the FDA Jurisdiction Over Tobacco Products, 86 GEO. L.J. 2677 (1998).

92 See Food & Drug Admin, v. Brown & Williamson Tobacco Corp., — U.S. — , 120 S. Ct. 1291, 1297(2000).

93 See Gibeaut, Gelling Burned, A.B.A.J., Sept. 1998, at 42; Alison Frankel, The Tobacco Deal to End All Deals, AM. Law., Dec. 1998, at 13.

94 See Frankel, supra note 66, at 54. Under the MSA, the tobacco companies pledged $500 million per year to pay the plaintiffs' attorneys, plus a $250 million “sweetener” per year. See Frankel, supra note 93, at 13.

95 See supra note 71.

96 And so, any policy must pay careful attention to who will pay the costs—the tobacco companies, or the consumer? If the latter, the addictive qualities of nicotine make it unlikely that added costs will deter consumption. And so any simplistic taxing policy will simply “pass through” to the individual taxpayer, doubly victimizing him or her. See Garner, supra note 9, at 15.