Product Liability Beyond the US

Chapter 4
Product Liability Beyond the US

A Introduction

Outside North America product liability litigation against tobacco companies has been less successful. The US experience certainly prompted a flurry of speculation about such claims and a certain amount of litigation, but there have been few ultimate success stories for the victims of tobacco related illnesses. In part this seems to be due to the starved resources of lawyers, who struggled to get such actions off the ground and the comparative lack of expert evidence, as was particularly evident in the Scottish case of McTear v. Imperial Tobacco Ltd.¹ The generally lower level of damages, typical lack of availability of punitive damages combined with less developed class action procedures in part explain why lawyers in Europe at least would be reluctant to invest in these cases, especially given the lack of contingent fees. There was no major honey-pot to attract them.

In England, Wales and Ireland cases foundered on the expiry of limitation periods and the judiciary’s unwillingness to use their discretion to allow the cases to proceed outside those limits. This may be a manifestation of a deeper psychological desire on the part of some judges not to engage with this type of innovative litigation, which they probably feel is best restricted to the unique American litigation culture. This is unfortunate for whilst some aspects of the US litigation involved novel legal issues, especially as regards the framing of the claims by states for recovery of healthcare costs, other claims, especially those relating to the period when it is alleged that industry knew of risks that were not disclosed or that industry manipulated products to promote addiction, raise relatively straightforward traditional legal issues, albeit against a complex and novel factual matrix. The seeming inability of most legal systems outside the US to address these claims ought to give anyone involved in those systems reason to pause and reflect on how the most damaging allegations ever made of harm caused by large corporations to consumers have never been litigated effectively. In those countries with heavy tobacco excise duties there is possibly a feeling that there is no need for the private law system to impose liability on the tobacco industry as it has indirectly met its healthcare costs, but it would be a remarkable precedent to allow taxation policy to affect private law rights. This also ignores entirely the corrective justice arguments favouring recovery by those injured by the wrongdoings of corporations.

In the first two waves of US tobacco litigation the industry seemed to both have its cake and eat it: first arguing that the risks were not established and then that smokers in the same period were aware of the risks and had assumed them when deciding to smoke. In some of the Third Wave US cases these defences did not work and juries often returned multimillion or even billion dollar awards on the basis of the industry playing down risks of which they had more knowledge than they had let on. In the US the exact contours of the legal reasoning is affected by the large role played by the jury. In Europe where the judge is the only actor it is clear that the industry was able successfully to argue that smokers had assumed a risk, even if at that time many in the industry had not accepted the risk and were questioning either the existence or scale of that risk. Accepting that smokers may have been aware of the potential health hazard should not prevent the industry’s conduct countering an assumption of risk defence. Behavioural economics teaches that smokers may have given undue weight to the assurances or doubts raised by the tobacco industry due to their wish to cling onto their smoking habit. Outside the US this argument has never really been fully developed. Judges have been even firmer in accepting assumption of risk type arguments than juries. Also on occasions the same unwillingness to take account of the psychology of the smoker has been displayed in some remarkable judicial statements that seem to determine the scientific question of whether smoking is addictive by a deduction from the autonomy and self-responsibility principles of the common law.2 How the common law can affect a physiological fact is hard to fathom, but perhaps indicates the judicial preference not to engage with these issues.

B England and Wales

In England a test case was brought by 47 plaintiffs³ against three defendants in Hodgson v. Imperial Tobacco Ltd. The plaintiffs’ claims were confined to a period between about 1957 and 1971 when it was contended that excess tar caused or materially contributed to the plaintiffs’ cancer. The basis for the claims appears to have been that there was a period when the tobacco companies knew about the danger of smoking and, in particular, the danger from tar, but did not warn about these risks or reduce the tar content. It has been estimated that the lawyers were claiming £50,000 ($84,000) per victim, which is small in comparison to the amounts at stake in the US.

After the Legal Aid Board refused to continue to finance the action, the claims were funded under a conditional fee arrangement allowed under s. 58 of the Courts and Legal Services Act 1990. This was the first large scale product liability case to be taken on a conditional fee basis after such fees were introduced in 1995.4 This is not a US style contingency fee. Lawyers do not recover a percentage of damages,⁵ but rather are allowed to uplift their fee in successful cases by up to 100 per cent depending upon the amount of risk involved.

However, the problem remained that the loser pays principle continued to apply. Normally the plaintiff lawyers would obtain after the events insurance to cover any liability, but this market was embryonic and would have been unable to provide cover in such high risk cases. The defendants feared being left out of pocket for their fees even if they were successful in defeating the claims. It was estimated that costs would be in the region of £3,000,000. Thus some of the first court skirmishes involved attempts by plaintiff lawyers seeking orders protecting them from the defendants’ threat to impose personal liability on them. In Hodgson v. Imperial Tobacco⁶ the Court of Appeal upheld Popplewell J’s refusal to order the defendants be barred from seeking to make the plaintiffs’ legal representatives personally responsible the legal costs. It was noted that lawyers acting under a conditional fee arrangement were no worse and no better placed in this respect that lawyers working under traditional funding arrangements. Moreover, such an order would be of little practical value for as the applicants had conceded this would have had to be subject to an exception for wasted costs orders and the Court foresaw other caveats that would have had to be added to any such order. However, the Court also held the conditional fee agreement need not be disclosed.

Popplewell J had also made an order that the directions made on 10 October 1997 and ‘any future directions made by the court in these actions may be released to the press, but the parties and their advisers are not to make any comment to the media in relation to this litigation without the leave of the court’. There had been concern on the defendants’ behalf about comment made to the media by the plaintiffs’ lawyer, Martin Day. The Court of Appeal overturned this order. It argued that a hearing in chambers was not a hearing in secret and that the press should have access to the orders. Whilst preferring that lawyers would not comment on proceedings they favoured the media having access to the facts and preferred to judge the lawyer’s conduct by the test for contempt of court where competing public interests could be balanced when determining if there had been an unjustified interference with the administration of justice

The outcome of this visit to the Court of Appeal was not entirely unfavourable to the plaintiffs. The attempt to impose a ‘gagging order’ had been rebutted and although their legal representatives remained potentially at risk for legal costs, the terms of the conditional fee arrangement remained confidential and at least their lawyers were reassured they would be judged by normal standards as regards any liability for costs. The new conditional fee arrangements were creating a new culture of litigation, but their efficiency was also being tested to the limits. The plaintiffs’ ability to meet the liability for the loser’s costs was concerning the defendants in the absence of insurance coverage. The next court action also shows that it was weighing on the minds on the plaintiffs who sought an order whereby, if the claim was ultimately successful, only those plaintiffs still involved in the litigation would be entitled to their costs,7 but if the claim failed, all the plaintiffs who had been involved at any stage would be liable to pay any costs order on a pro rata basis. However as Wright J noted this solution had the disadvantage of failing to encourage those plaintiffs with weaker cases to discontinue. Instead he ordered liability for, and the benefit of, costs in relation to the issues common to all the plaintiffs would be several rather than joint. A register of plaintiffs would need to be set up and a running account of costs maintained. It was noted that this was the first major group action involving conditional fee agreements, but the situation was considered analogous to plaintiffs who had the benefit of legal aid. Although it was also commented that it was not yet clear what would happen to an unsuccessful plaintiff at the end of litigation conducted under a conditional fee agreement. Legally aided claimants had not been liable to pay the other party’s costs.

Proceedings were not commenced within the statutory three year limitation period, and Hodgson, together with eight other representative lead plaintiffs, sought a declaration that the provisions of s. 11 of the Limitation Act 1980 should not apply as the court would exercise its discretion under s. 33(1) to allow the claim out of time. The application was unsuccessful as it was felt the prospective claimants had failed to act reasonably or promptly. The effective date of knowledge for the purposes of calculating the primary limitation period was the date of diagnosis. Once that date had passed none of the claimants took any action until after the limitation period when they responded to an advertisement placed by solicitors seeking to launch a class action. It has held that it could not have been the intention of Parliament to allow a claim to proceed under s. 33 Limitation Act 1980 where the claimant, had acquired the relevant knowledge, but did nothing until a situation arose which enabled him to embark upon litigation which he was previously unable or unwilling to bring for whatever reason. Furthermore, the claims possessed a limited financial value when compared with the potentially vast cost of bringing the claims. The claims were also described as speculative and likely to give rise to difficult issues of causation, volenti non fit injuria and contributory negligence. This decision effectively killed off the attempts in England and Wales to bring tobacco product liability cases. The claimants were left potentially exposed to costs orders, which were only avoided by the defendants agreeing not to enforce costs in exchange for the claimants’ solicitors, who reckoned to have invested millions in the case, agreeing not to bring actions against tobacco companies for a number of years.8 An attempt to bring a case against Phillip Morris in the US was also thrown out on forum non conveniens grounds.⁹

Most medical treatment in the UK is still provided free of charge by the NHS. It is generally thought that the NHS cannot recover costs from patients or tortfeasors, except in limited circumstances in relation to road accidents where insurers may have to contribute modest amounts towards the cost of hospital treatment and emergency medical treatment. Finding a way to permit cash strapped NHS trusts (the local bodies responsible for finances) to recover from the tobacco industry the costs of treating those harmed by smoking would be a very popular measure. Consideration was given as to whether healthcare costs recovery claims were possible. Actions in negligence and strict liability were considered problematic as the NHS trusts’ losses are purely economic in nature. The most plausible basis for a claim was thought to be that of conspiracy to use unlawful means with the intent to injure. The conspiracy would have centered on the creation of various organisations to promote sales and to counter claims that smoking injures health. The unlawful acts would involve the tort of deceit due to the provision of inaccurate evidence about the risks and causation of smoking related diseases in advertisements and statements to governments which the organisations knew to be false and misleading. For this type of conspiracy, it does not seem necessary to show that the defendants intended to injure the plaintiff, so long as the injury was a natural consequence of their actions. The NHS trusts would have to show they were damaged by the deception, leading to increased smoking and, hence, increased smoking related diseases and associated health care costs. Such a claim would have been novel and certainly aptly described as speculative. It also might have been inappropriate to base the claim on the element of conspiracy, which may not be present in all cases and is usually difficult to establish. In any event these claims have not been brought.

The Law Commission published a Consultation Paper proposing that the NHS be given the right to recoup its costs; however, this was concerned with recovery in general and not linked to smoking.10 However, this would first depend upon the party being found legally liable, which would be problematic in the case of tobacco companies. One significant practical objection was the excessive cost of recoupment, which also is at the centre of a deeper debate about the role of litigation in ordering society. The Law Commission argued that as the NHS stood to gain £120,000,000 per annum; it thought it unlikely that the costs would exceed this amount. This missed the point, however, that while the costs may be justified from the NHS perspective, they are ultimately borne by the general public who pay liability insurance premiums and it may not be in their interest to have this additional burden imposed. Perhaps the most important question is the one of principle: whether imposing liability for healthcare treatment on tortfeasors is valuable if it merely involves moving the burden from one group to another similarly composed group of people? Instead of paying taxes, people simply end up paying higher prices for their goods, services and liability insurance policies. The Law Commission thought that taxpayers and those who would bear the burden of increased liability would not be identical groupings. Indeed, they are not because the tax system places no (or at least a smaller) burden on the weakest members of society, whereas, the effects of liability are linked to consumption rather than the ability to pay. The Law Commission seemed to consider it beneficial that the cost of tort compensation be confined to those who benefit from the activities leading to tort liability. In many sectors, the amounts involved in relation to product turnover would be relatively small so that the impact would not be too significant. In relation to tobacco, however, there would have to be quite a considerable rise in price, borne by all tobacco smokers irrespective of income. This would have regressive effects because smokers are disproportionately found amongst low income groups and the elderly. The value of this outcome of this change in policy is debatable.

It is good news, of course, if there is more money for healthcare. Increased tobacco prices may also be good news from a tobacco control perspective if they lead to reduced consumption. The problem is the method through which healthcare revenue would be increased and tobacco prices raised. Whenever liability laws exist, the happiest people are lawyers, insurers and other parasitic experts. The money recouped is likely to be matched to a significant extent by the money expended on recovering it. A more efficient way would be to raise revenue by increasing taxes on tobacco. This, however, leads on to discussion of the Law Commission’s second counter to those who object to the principle of recoupment. The real reason why it favoured liability over taxation is that higher taxation is simply not politically feasible. It accepted that the money recovered by recoupment would not go directly to the NHS, but rather flow into the general public finances. Nevertheless, the Law Commission saw recoupment as providing an extra valuable source of public finance to be used for some purposes that would otherwise have to be forgone, and that would not affect the tax burden as a whole. In its report, the Law Commission quotes Cane’s observation that ‘the difference between public and private expenditure is of great political importance’.11 It is true that the public will not readily accept transparent taxes, but will more easily accept the superficial logic of imposing liability on those whose activities have injured others, whilst remaining blissfully ignorant of the way in which the insurance system spreads those costs. This is the paradox of the post-modern welfare state. One can accept the Law Commission’s solution may have been a sensible political proposal, but it can still be criticised for not explaining the broader structural reasons why it was forced to adopt this private law solution to an essentially public regulatory problem.¹² There have been no moves to introduce such a scheme.

C Scotland

McTear v. Imperial Tobacco Ltd ¹³ is a remarkable case. Although only a first instance decision of Lord Nimmo Smith in the Scottish Court of Sessions, his judgment delivered on 31 May 2005 must challenge for being one of the longest in Scottish legal history – totalling 570 pages in the official reports, although of course still dwarfed by Judge Kessler’s effort in US v. Phillip Morris.¹⁴ That in itself is worthy of comment. Few legal systems outside the common law world could or would afford this amount of time to one action. ¹⁵ It is no wonder that so little litigation is capable of being funded if litigants know they can be exposed to such a marathon. The case involved 42 court days and mastering 800,000 pages of documentation – a considerable sacrifice for lawyers working on a ‘no-win-no-fee’ basis given the risks involved. Even though due process arguments can be invoked to justify allowing the defendant to test the claimant’s (or in Scotland pursuer’s) case thoroughly this must surely be proportionate. It might be argued that this was such an important case of principle that this case merited such detailed treatment. However, that sits uneasily with the refusal to award legal aid. There were no concessions seemingly made for the unequal fire power between the two legal camps and teams of experts.

The judgment is an excellent research tool as it explores in detail the development of knowledge about the harmful properties of tobacco and the industry’s conduct. However, it is not an easily accessible decision as it sets out at length the evidence of the witnesses and submissions of counsel – hence the production of an indexed version by the publishers. The judge took a hard line on both the substantive issues the pursuers had to prove and the evidence adduced by them and justified his position at length. Doubtless it is a hard task being a judge having to hear such a sensitive case. The odds may have been stacked against the pursuers structurally and legally and whilst the judge should do nothing more than apply the formal rules of the law, there are clear signs that the judge was not predisposed to favour the claim being advanced. Some rules clearly would have caused a problem for the pursuer, but the difficulties were enhanced by the frequent reference by the judge to the ‘individualist philosophy of the common law’. The chance litigants take with the predispositions of the judge is one reason why it is too risky to trust in litigation as a public heath strategy.16 The judgment of Lord Nimmo Smith can be criticised at times for allowing this individualist philosophy to influence the general assessment. For instance, he comments: ‘The fact that smokers such as Mr McTear may find it difficult to give up does not appear to me to deprive them of the element of free will which is fundamental to the individualist philosophy of the common law’.¹⁷ But the individualist philosophy of the common law has nothing to do with the scientific question of whether nicotine is addictive.

(i) Background

Alfred McTear of Beith in the West of Scotland started smoking in 1964. This date was significant as it was seven years before health warnings were introduced. He smoked around 60 cigarettes a day. He claimed these were mainly ‘John Players’ produced by the defendant, but admitted to using some ‘Old Holborn’ roll-up cigarettes. In 1992 he was diagnosed with lung cancer and stopped smoking. In January 1993 he started legal action against Imperial Tobacco for continuing to supply tobacco products knowing of their dangers and in the alternative failing to put warnings on its cigarette packets in the 1960s. Mr McTear died in March 1993, aged 48, but the action was continued by his widow, Margaret.

(ii) Lawyers

McTear’s lawyer was Cameron Fyfe of the well-known Glasgow based law firm Ross Harper. In July 1993 the Scottish Legal Aid Board refused to grant legal aid. The defences of volenti non fit injuria and contributory negligence clearly played on its mind. It was unwilling to fund a difficult, complex, lengthy and expensive case in the light of the limited prospects of return. The case was estimated to be worth £100,000 and this would be reduced if contributory negligence was established. In isolation this can be well understood and the determination withstood judicial review.18 It failed of course to take into account how many other smokers might come forward if McTear was successful. It remains problematic to know how cutting edge law can be made in a system whose legal aid authorities are unwilling to take chances and where the conditional fee system does not give the same incentives as the US contingent fee system.

In Scotland there is no class action procedure, not even anything akin to the group litigation order in England and Wales.¹⁹ If it had been available this might have demonstrated the significance of the issue and undermined the argument about limited returns. However, this would have required an element of organisation that many claimant firms, especially in Scotland where practices are typically in smaller units than in England, would have found hard to organize. It was probably more manageable to bring a test case. Reading the judgment it is clear that the judge did not look favourably on the tactics of the pursuer’s lawyers. They had a QC presenting the case, so it must be assumed that he knew well issues of pleading and evidence, and the flaws the judge found, with his unforgiving application of rigorous legal analysis, were exaggerated because the case was being run on a relative shoestring.

By contrast the defendants, by the judge’s own assessment put a lot of resources into the case.²⁰ They also assisted the court by paying for the 85,000 pages of evidence to be scanned into an electronic database with an operator in court to display any page on screens. The evidence and counsel’s submissions were transcribed by two operators using the LiveNote system, which produced an almost instantaneous transcript on separate screens.

(iii) Witnesses

Mr McTear gave evidence on commission before he died. There was also evidence of his work and family life. This was not very favourable showing that he had alcohol problems, a criminal record that had led to imprisonment on 11 occasions and a patchy work record, including being thrown out of the army, which he had lied about. The judge described Mr McTear as ‘a profoundly dishonest man who readily lied in order to obtain advantage for himself’.21 Mrs McTear was also described as ‘an unreliable, and in some respects an incredible, witness’.²² Lawyers cannot always choose their clients, but they might have been expected to vet closely the litigants selected to bring a high risk test case especially as it was being brought on a conditional fee. Whilst it is commendable that the opportunity to access justice is provided to all, more sympathetic pursuers might have been selected for such a test case. The judge’s assessment of the McTear’s merely compounded the problems pursuers would have faced whoever was the litigant.

Part of the problem seems to have concerned the selection of expert witnesses. The pursuer had one of the most famous medical scientists in this field, Professor Sir Richard Doll. The problem was that he was an epidemiologist and the judge was not prepared to accept that a statistical association was sufficient to prove causation; at least where the evidence to support the epidemiology had not been properly placed before him. This is one area where the legal presentation of the case seems to have been open to criticism.²³ However, the attitude of Sir Richard clearly did not endear him to the judge who complained that he had merely assured those who disagreed with him they were wrong without helping the judge by giving reasons ‘coupled from time to time with epithets which [the judge] frankly found it unbecoming for a man of his stature to have chosen to use’.²⁴ The judge commented that both Sir Richard and Professor Gerard Hasting, a Professor of Social Marketing, carried advocacy into the courtroom. The other medical experts for McTear came across better to the judge but, in two cases at least, it was obvious the judge felt they did not have the expertise to prove the pursuer’s claim. In particular, mere reference to official reports documenting the evils of tobacco was unpersuasive. It was argued by the defenders that conclusions in official reports and messages that might be validly made to put across a public health agenda were not subject to the same standards of proof as the medical or legal community would require. This argument found favour with the judge. Also the pursuer got nowhere when they called Gareth Davis, Chief Executive of the defender, as a hostile witness. He simply used a straight bat to maintain their position that they did not know that cigarettes caused cancer and had simply agreed to place warnings on their products.

McTear’s lawyers tried to discredit the defendant’s experts, mocking that they could not get anyone from the UK prepared to give evidence; noting that some had received tobacco industry funding in the past and were receiving payment for their evidence. This did not seem to tarnish them in the mind of the judge.25 To be fair it could not. The judge could not assume they were not acting as independent experts and payment is the norm for expert witnesses.²⁶ In fact it was apparent that many of the defence witnesses impressed the judge. It is of course impossible to ascertain the extent to which their evidence persuaded the judge that the pursuer’s case had not been made out or whether his inclinations in that direction made him amenable to their evidence. However, it is paradoxical that witnesses being hired to give evidence are seen as more impartial than those providing their services for free because they believe in what they are arguing. This does not mean that the evidence of the pursuer’s evidence should not be tested in the usual way, but it does seem harsh to hold the free provision of services against them. Not having been in the court, it is of course impossible to tell if their advocacy of the cause undermined the objectiveness of their evidence. Outside the US it is unlikely that claimants will be able to afford to pay regularly for medical expertise in such cases and so the judge’s views on volunteer experts are concerning.

(iv) The Judgment

The defendants won the legal arguments hands down on every point. One might say that the judge gave the pursuer’s case short shrift, but given the length of the judgment that had better be phrased as long shrift. The fact that the judge found McTear’s case so weak and yet went to such length to justify the decision emphasises the complex challenges tobacco litigation poses to the legal system.

On causation the judge identified three issues that had to be decided in the pursuer’s favour for liability to be possible. General causation (i.e. that tobacco causes lung cancer); individual causation (i.e. that this particular person’s cancer was caused by smoking); and fault causation (i.e. that some negligent conduct of the defendants was the reason for the pursuer being injured in that way). Lord Nimmo Smith held the pursuer failed on all three counts.

(v) General Causation

The pursuer’s case for general causation amounted to an assertion that it had been proven because it was now the consensus opinion amongst the medical and public health community. The judge noted, however, that there was no evidence of how tobacco caused cancer other than the epidemiological studies. As regards that evidence the judge quoted the US Surgeon-General’s report of 1964 that ‘The causal significance of an association is a matter of judgment which goes beyond any statement of statistical probability’.27 As the judge commented, ‘The finding of an association between an exposure and a condition or disease, even if judged to be statistically significant, does not of itself connote that a causal connection between the two is established’.²⁸ Lord Nimmo Smith found a fundamental defect with the presentation of the pursuer’s case was that it had not taken him to any of the primary literature. He was not prepared to accept conclusions without reviewing the evidence from which they were derived. He was clearly disappointed both with counsel for not providing him with the chance to review the detailed studies and with Sir Richard Doll’s failure in cross-examination to explain why those who disagreed with him were wrong.

(vi) Individual Causation

The judge then argued that statistical probability could not be used to prove individual causation. He noted that in any event 10 per cent of lung cancers affected non-smokers. Earlier he had considered a line of cases culminating in Fairchild v. Glenhaven Funeral Services²⁹ that held the traditional rules did not apply where there were competing potential sources of the harm. He was unwilling to develop the underlying rationale that a party should have the burden of proving a risk he had negligently caused had not caused the injury related to that risk. Instead he focused on alternative explanations for why McTear might have contracted lung cancer including personality traits, family history of lung cancer, stressful lifestyle, viral infections of the respiratory tract, alcohol abuse, vitamin A deficiency, low socio-economic status and even residence in an urban area of west Scotland.³⁰ On this analysis it is hard to see how any claim against a tobacco company could ever succeed and the judge seems to have overlooked that it has merely to be shown that on the balance of probabilities the lung cancer was caused by the defendant’s negligence. If 90 per cent of lung cancer cases are caused by smoking that standard would seem to be met. Whereas the conclusion on general causation could be explained by the lack of evidence presented, more fundamental issues are at stake in the approach the judge took to individual causation, which seemed to demand more precision than is needed by a test based on the balance of probabilities. After all if 90 per cent of lung cancer cases are caused by smoking and a smoker contracts lung cancer it does not seem to be unfair to suggest that on the balance of probabilities the illness was due to their smoking.

(vii) Fault Causation

After discussing general and individual causation the judge went on to discuss addiction, although the relevance of this discussion only became obvious later in the judgment. The judge held that tobacco was not addictive. He picked up on the lack of clarity about what is meant by addiction. So even if the defendants accepted that nicotine could be regarded as addictive by reference to DSM-IV and ICD-10,31