Tobacco Litigation

Since the early 1990s groups of prominent tort lawyers had met to discuss further possibilities in tobacco litigation. Most of them had experience in asbestos tort litigation. The American asbestos industry had been bankrupted through litigation. Furthermore, asbestos litigation had produced “a skilled tort plaintiff’s bar.”⁴⁰ Lawyers like Ron Motley, who was called “the legal nemesis of the asbestos industry”, became involved in tobacco litigation.⁴¹ While the internal secret documents of the tobacco companies were unearthed by the thousands, these lawyers considered that it was time for “a massive legal attack.”⁴²

In Mississippi, an experienced legal team under the leadership of attorney general Michael Moore filed a lawsuit against the tobacco industry on the 23 of May 1994 on behalf of the state of Mississippi. At the press conference Moore explained: “[t]his lawsuit is premised on a simple notion: You caused the health crisis, you pay for it. The free ride is over. It’s time these billionaire tobacco companies start paying what they rightfully owe to the Mississippi taxpayers.”⁴³ It was essential for lawyers like Motley and Don Barrett to evade the trap faced by an individual suit. In individual lawsuits, tobacco’s legal counsel would argue that the individual had made the choice to smoke. Barrett exclaimed: “The State of Mississippi has never smoked a cigarette.”⁴⁴ Mississippi made no “choice” to smoke, and so another one of the key legal strategies of the tobacco industry was rendered useless. Other states soon followed Mississippi’s example: “Minnesota in August 1994, West Virginia, Florida and Massachusetts in 1995.”⁴⁵

By 1997, more than 30 states had “joined the cause.”⁴⁶ Legal counsel for the plaintiffs filed “motion after motion” in order to obtain the secret documents of the tobacco companies, a legal strategy they had already used in asbestos litigation. In the end they got more than 30 million internal documents.⁴⁷ According to Brandt, “considerable evidence” was found that the industry had systematically destroyed evidence of its knowledge of health concerns caused by their product.⁴⁸ Despite such attempts, the newly discovered documents proved an important source for legal evidence. As we have seen in the first three chapters which described the history of tobacco and the cigarette controversy, these internal documents showed that tobacco companies had been much more aware of the dangers of their product than they claimed to have been. The secret files demonstrated how tobacco companies had tried their best to convince the general public smoking was not dangerous, against their own knowledge of the contrary.

The tobacco industry was left exceptionally vulnerable from continued revelations of fraud by their own internal documents. An increasingly hostile media assured that damaging documents were brought to the public’s attention. Debate was even more augmented when in February 1996 CBS’s investigative news program 60 Minutes broadcasted an episode on Jeffrey Wigand, who had formally been a vice president at the Brown & Williamson Tobacco Company.⁴⁹ Wigand had turned on the industry and had been deposed in November 1995 in the lawsuit brought by the State of Mississippi. His deposition was taken by plaintiff’s attorney Ron Motley. The deposition had been extremely polemical. Tobacco’s legal counsel objected to every question posed by Motley and every answer given by Wigand. The deposition by Wigand and the knowledge he wished to share was of enormous value for the plaintiffs and extremely dangerous for the tobacco industry. Wigand declared that Mr. Sandefur, the CEO of Brown & Williamson, had stated on multiple occasions that the tobacco companies were “in the nicotine delivery business.”⁵⁰ 60 Minutes offered an overview of the systematic smear campaign against Wigand organized by the tobacco industry. Wigand and his family suffered greatly under different kinds of harassment. The show itself had been delayed for 6 months out of fear of being subpoenaed by the industry. Eventually the program aired, discrediting the tobacco industry instead of Wigand. Wigand detailed in the interview on 60 Minutes how the industry adjusted nicotine levels to make cigarettes more addictive. Wigand declared that cigarettes were: “a delivery device for nicotine.”⁵¹ On later occasions in court the tobacco companies would argue that “blending tobacco is an art; it’s not a nicotine driven science.”⁵² In 1999 Wigand’s story was made into a Hollywood adaptation titled: The Insider. ⁵³

Richard Kluger’s Ashes to Ashes: America’s Hundred-Year Cigarette War, the Public Health, and the Unabashed Triumph of Philip Morris published in 1997, narrated in great detail how tobacco companies continued to sell a deadly product and how the industry had succeeded in being permitted to continue to sell a dangerous product.⁵⁴ His book won the Pulitzer Prize and contributed to an already heated public debate on the tobacco industry. Public opinion and the media were now eager to see the tobacco companies convicted for, what seemed, the greatest cover-up in American history.

At least in seven of the attorney general suits were historians deposed as expert judicial witnesses for the tobacco industry.⁵⁵ In Florida Ambrose, Burns, and Ludmerer were deposed for the industry.⁵⁶ By then these three historians had several years of experience in testifying for the defence. Hyman Berman and George Green were deposed and testified in court in the Minnesota trial. Hyman was a professor of history at the University of Minnesota specialized in American Labour history.⁵⁷ It would be his only testimony for the tobacco companies. George Green was a colleague of Hyman at the University of Minnesota, he would also only testify this one time. Green is specialized in American business history.⁵⁸ In Texas, Otis Graham served as an expert for the industry for a second time, accompanied by John Drobny, an independent consultant. Drobny is the only non-academic who has been identified to have been deposed as a historian in tobacco litigation.⁵⁹ In the Mississippi attorney general case, experienced industry-employed experts Ludmerer and Sansing were deposed.⁶⁰ Charles Lowery, a professor of History from the University of Mississippi was also deposed. He was specialized in civil rights history.⁶¹ John Ray Skates, a co-worker of Lowery, was also deposed in the same case. He was specialized in the history of Mississippi and the history of the American military struggle with Japan during World War II.⁶² Both Lowery and Skates only served as expert witnesses this one time. Experienced experts Ludmerer and Parrish were deposed in Washington.⁶³ Michael Schaller was deposed in Arizona.⁶⁴ He is a specialist in the diplomatic relation of the US and East Asia. Wayne Morgan, who studied American culture in the twentieth century, was deposed in Oklahoma.⁶⁵

The industry’s legal strategy in most states probably was to construct an expert team of historians combined of, on the one hand local academic historians and on the other, experienced witnesses. It is very probable that there were many more historians involved in the attorney general cases. But since settlement negotiations started in early 1997, the records of the involvement of historians are scarce because in the end only a few were deposed. No historians were recruited by the state attorneys general as expert witnesses. In the end, with only the Mississippi state trial gone to court, no court had ruled, based on historical documents, that the tobacco industry had conspired against the American public. Settling was a valuable strategy for the tobacco companies. The attorneys general got their “victory”, and damages were paid. But further tobacco litigation still needed to prove in court that the industry had committed a fraud against the public as long as no judge had ruled on the alleged scientific controversy and the industry’s role in its construction.

The tobacco companies knew they were certain to lose some of the state attorney general cases and decided to negotiate a “global settlement agreement.”⁶⁶ In June of 1997, the tobacco companies agreed to pay $365,5 billion over the next 25 years to the states. The settlement also stipulated that all individual litigation brought against Wigand and other whistle-blowers, and plaintiff’s lawyers would be ceased. The tobacco industry also agreed to be regulated by the FDA. In return, the tobacco industry would be protected from class action suits.⁶⁷ The Minnesota trial team was awarded the “WHO’s Tobacco Free World Award”, for their involvement in the litigation against the tobacco companies.⁶⁸ Former Minnesota state attorney general Hubert Humphrey III and former assistant attorney general Douglas Blanke wrote that: “[t]hruth matters” and “the real value of truth is in its power to effect change.”⁶⁹ The cases brought by the state “altered the course of national debates” and helped “re-frame the tobacco issue.”⁷⁰ Not all health advocates were agreeing that the settlement was “the most historic public health achievement in history”, as Mississippi attorney general Moore called it.⁷¹ Anti-tobacco advocate Stanton Glantz declared: “The fundamental reality of tobacco is that the way to beat them is to beat them. I have never found a single instance anywhere, anywhere, where a compromise with the industry served the public health.”⁷² In hindsight, Glantz was not that far off.

A bipartisan bill was prepared in Congress, which proposed serious regulation for the tobacco companies. Under the leadership of Republican senator John McCain from Arizona, a bill was drafted which was called “The McCain bill.” The draft included higher taxes on tobacco products, FDA regulation of nicotine and provisions that aimed to regulate and diminish teen smoking.⁷³ It even augmented the proposals for damages in the “global settlement” from $385 billion to over $500 billion. In 1998, the McCain bill was voted out of the senate subcommittee. The lobbying machine of the tobacco industry in 1997 was sponsored with 23 % more funds when compared with the previous year. The tobacco companies devoted “a record $35.5 million to lobbying.” The industry also spent $40 million in radio and television ads in 1998 to represent the bill as “a new tax targeted at working people.”⁷⁴ The tobacco industry “successfully lobbied to kill the bill on June 17, 1998.”⁷⁵ The McCain bill was, furthermore, not supported by everyone in the health community. Anti-tobacco advocates like Staton Glantz were critics of the bill, arguing that the tobacco companies could be brought down in court, and settling would only assure the industry’s survival.⁷⁶ The McCain bill was lost, and with it a great opportunity to regulate the tobacco industry in an unseen manner.

After the collapse of the McCain bill a new settlement had to be negotiated. The failure of the bill and the opposition by parts of the public health community made the state attorneys feel pressured for time and support. Such a “shift in leverage” produced a new settlement which bore little resemblance with the Global Settlement.⁷⁷ The new Master Settlement Agreement of 1998 agreed that “five major tobacco companies had to pay $206 billion to 46 states over the next twenty-five years.”⁷⁸ The four states that had already settled, Florida, Minnesota, Mississippi, and Texas added another $40 billion. The total cost to settle for the tobacco industry was a grand total of $246 billion.⁷⁹ Only modest restrictions were put into place on advertising and promotions. Cartoon characters like Joe Camel were prohibited. But in general the marketing restrictions on youngsters and children had largely been removed from the settlement.⁸⁰ The global settlement had lost a lot of its power.⁸¹ The proposed FDA regulatory power was dropped along with other provisions on youth smoking.⁸² Furthermore, the immunity requirements for class action litigation that were negotiated in the Global Settlement remained in place.⁸³ However, a definitive success of the MSA was that the tobacco companies had agreed to release approximately “seven million documents” totalling “70 million pages of documents and nearly 20,000 other media materials.”⁸⁴ By 2009, “several hundred peer-reviewed articles had been published” which had researched these sources.⁸⁵ The insights gained from such research had significant impact on a national and international level.⁸⁶ The MSA of 1998 “left the Marlboro Man in the Saddle”, as one observer noted. Health economist Dorothy Rice from the University of California, San Francisco calculated that the cost of treating smoking-related diseases for just 1 year in the state of California was about $8.7 billion. The state had negotiated a settlement in which the tobacco companies agreed to pay the State of California $500 million on a yearly base for the next 25 years. “It’s a terrible deal”, she concluded.⁸⁷

The Minnesota settlement provisioned the creation of the Minnesota Partnership for Action Against Tobacco. The MPAAT was created in 1998 and aimed at “diminishing the human and economic consequences of tobacco use.”⁸⁸ The organization was funded with damages paid by the tobacco industry. In an article in Tobacco Control from 2004, Glantz et al., detail how the industry attacked the foundation in a variety of ways, claiming misuse of funds and conflicts of interest and political expenditures.⁸⁹ These accusations from the tobacco industry were backed up by a new ally of the tobacco companies, the state attorneys general. The attorneys general had found a new source of revenue for the states and were keen on defending that resource. Multiple amicus briefs were filed by state attorneys general in support of the tobacco companies in lawsuits concerning the funding of the MPAAT, fearing these expenditures “might jeopardize” the tobacco industry’s ability to make payments directly to the states required by the MSA.⁹⁰ Brandt came to a similar conclusion: “The industry had secured new allies by providing a steady flow of state revenues. Now state governors and Attorneys General would help the companies fight off litigation.”⁹¹ Eventually, many of these tobacco funded programs established by the MSA saw their budgets significantly reduced.⁹²

In general, for health advocates, the MSA was “a missed opportunity to make historic change.”⁹³ Despite all the problems with the MSA, the price of a cigarette pack increased. According to Brandt: “[t]he MSA “tax” has itself had a significant impact on youth smoking” and “[i]n the years following the MSA, tobacco sales fell by more than 20 %, reaching a level not seen since 1950.”⁹⁴ Despite this fall in tobacco sales, the tobacco industry which had been in mortal danger in 1997, entered the new millennium relatively intact ready to sell its product at home and abroad.

In the State of the Union of 1999, President Bill Clinton announced that his administration would initiate civil litigation against the tobacco companies. After the individual states had settled with the tobacco companies, the Department of Justice (DOJ) sought to recover health care costs made by the federal government. The government accused the tobacco companies of having been engaged in “a conspiracy to deny well-established associations between smoking and multiple diseases, the association between second-hand smoke and lung cancer and the addictive nature of nicotine.”⁹⁵ The tobacco companies were indicted under the Racketeering Influenced and Corrupt Organizations Act (RICO). In September 1999, the DOJ brought its case against the tobacco industry (Philip Morris, R.J. Reynolds, Brown & Williams, Lorillard, Liggett, American Tobacco Co., British American Tobacco, the Council for Tobacco Research, and the Tobacco Institute). The DOJ accused the tobacco industry of committing fraud, violation of state consumer protection statutes, marketing, selling of defective and unreasonably dangerous products [strict liability, negligence, and breach of implied warranty], and engagement in a general conspiracy against the American public. The federal government sought to recover federal spending on tobacco-related diseases for “an estimated $280 billion.” It was the largest sum ever demanded in a single trial in civil litigation in the history of American law, according to Brandt.⁹⁶ Proceedings started in September 2000, the trial itself commenced in September 2004. The whole trial took 99 weeks. The case was appealed on multiple occasions and on various grounds. In 2006, the US Supreme Court denied certiorari.⁹⁷ Still legal proceedings continued until November 12th of 2012 when Judge Gladys Kessler reaffirmed her ruling from 2006. In 2006, she had stated that the tobacco companies had lied about the dangers of cigarettes at least since 1964.⁹⁸ The tone of her ruling was especially hard for the tobacco industry: “Defendants have marketed and sold their lethal product with zeal, with deception, with a single-minded focus on their financial success, and without regard for the human tragedy or social costs that success exacted.”⁹⁹ The success of the active evasion by the industry of a condemning verdict, in which the industry was convicted for fraud, had now come to an end by the judgment in US v. Philip Morris et al. As we shall discuss in Chap. 14, historians played an important role in this trial as expert witnesses.¹⁰⁰

In the State of Florida on the fourth of May 1999 a class action suit was brought by six smokers with cancer against R.J. Reynolds, Philip Morris, Lorillard, American Tobacco co., Brown & Williamson, Liggett, Brooke Group, Dorsal Tobacco, the Council for Tobacco Research, and the Tobacco Institute.¹⁰³ At first the class was defined as “[a]ll United States citizens and residents, and their survivors, who have suffered, presently suffer or who have died from diseases and medical conditions caused by their addiction to cigarettes that contain nicotine.”¹⁰⁴ The class was later limited by the court to smokers from Florida because “a nationwide group of more than one million smokers was simply unmanageable.” The Engle case was the first smokers’ class action ever approved in the US.¹⁰⁵ The Engle trial would become the longest in the history of US civil litigation.¹⁰⁶

The trial was structured in three phases. Engle I established the general liability, or “common issues affecting all class members”, in other words the fraud committed by the tobacco industry. In the second phase the lump sum of $145 billion was awarded to the class, it was “the largest award of its kind in US history.”¹⁰⁷ But before the third phase could get started, Engle II was overturned on appeal. The plaintiffs then appealed to the Florida Supreme Court. In its landmark decision of 2006, the majority opinion stated that in every single plaintiff’s case, the court had to determine “whether any class members relied on Tobacco’s misrepresentations or were injured by Tobacco’s conduct.”¹⁰⁸ Furthermore, the court found that the entitlement of damages should be considered more closely. There were compensatory damages to which an individual could be entitled, but the court was not sure whether the individuals were entitled to punitive damages from the tobacco companies. The court asked to review the way in which punitive damages were included to the compensation of individuals.¹⁰⁹ The court also addressed the class certification. According to the Florida Supreme Court it was problematic to handle class-wide punitive damages, and at the same time the negligence for every single class member. On those grounds the court decertified the class.¹¹⁰ The Federal Supreme Court denied certiorari on the first of October 2007.

The decision of the Florida Supreme Court created a “pragmatic solution” in order to try a large number of cases with highly individualized claims. The court determined that each future case would be considered individually. But the court had “affirmed that smoking cigarettes causes numerous diseases and health conditions … and many forms of cancer” and that “the defendants placed cigarettes on the market that were defective and dangerous … nicotine in cigarettes is addictive … the defendants agreed to conceal or omit information regarding the health effects of cigarettes or their addictive nature … all of the defendants sold or supplied cigarettes that were defective … and that all of the defendants were negligent.”¹¹¹ This verdict made the tobacco conspiracy and thus the industry’s negligence res judicata.¹¹² Plaintiffs could now, in theory, skip the costly trial period in which the tobacco conspiracy, the addictiveness, and the health dangers of smoking had to be proven.¹¹³

With the certainty that they did not have to prove the industry’s deceptive practices all over again, “more than 8,000 plaintiffs filed individual claims against the tobacco companies.”¹¹⁴ The cases were named the Engle Progeny cases. Bloomberg News reported in March 2013, after the reconfirmation by the Florida Supreme Court of its 2006 decision, that the combined number of cases related to Engle faced by Philip Morris and R.J. Reynolds alone was higher than 8,000. According to its yearly report, Philip Morris is currently involved in 4,800 post-Engle cases. R.J. Reynolds announced in its annual report that the company was currently engaged in 5,750 Engle Progeny cases.¹¹⁵ Phillip Morris and R.J. Reynolds alone are presently involved in about 10,550 court cases in Florida. I made a schematic overview of the cost of litigation for the tobacco companies in Engle Progeny cases (Table 13.1).

With only 2 % of all Engle Progeny cases brought to trial, the tobacco industry might be confronted with considerable legal cost and the payment of large amounts of damages in the future. In July 2014, a jury in Florida in an Engle Progeny case awarded $23,6 billion in damages to the wife of a smoker who had died of lung cancer. The jury awarded $17 million in compensatory damages, the rest of the $23 billion are punitive damages. Legal counsel for the tobacco companies promised a swift appeal. With thousands of Engle Progeny cases pending trial, tobacco companies’ legal counsel will sure go all out to limit the amount of damages awarded in Robinson v. R.J. Reynolds to avoid a dangerous precedent. ¹¹⁶ As legal professor from Northeastern University Richard Daynard put it: “There are real risks for the industry here” and “There’s presumably nothing about this case that is so special that it could not be replicated in many cases in the future.”¹¹⁷ Although damages are spread over several years and already budgeted into the yearly expenditures of several tobacco companies, several billions of dollars can do serious damage to a company, even to the tobacco industry.¹¹⁸ The example from the Florida tobacco litigation could inspire other states. Yet, as we shall see, tobacco’s lobbying machine has worked hard on avoiding repetition of Engle in other American states by urging for changes in laws on class actions and consumer protection.

Historians continue to play a role in Engle Progeny cases as frequent expert witnesses.¹¹⁹ Almost all historians serve as witnesses for the defence. They argue that the individual had enough information in order to make an informed adult choice.¹²⁰ The “choice” strategy has now become tobacco’s main legal strategy. I found only two historians who testified for the plaintiffs in Engle Progeny cases: Robert Proctor and Louis Kyriakoudes.¹²¹ The Engle Progeny cases will take decades more to finalize and historians will continue to play a role, on both sides. This prospect of continued litigation-driven history, forces the historical and legal communities to reflect upon the practice of expert witnessing by historians.

Smaller cases; individual, third-party, and class action cases continued through the late 1990s and the 2000s.¹²² In February 2005, the Class Action Fairness Bill, was signed into law by Republican President George W. Bush. The law moved most class action from state courts to a federal level, thereby considerably augmenting litigation costs. The federal level is also considered “more hostile to class actions than the state courts.” Harry Read, then Democratic leader of the US Senate issued a press release after the bill was confirmed which stated: “Yet another real world effect of this bill is to help the tobacco industry avoid accountability.”¹²³ Furthermore, civil liability and punitive damages were “increasingly constrained in the United States, particularly under the industry-friendly Bush Administration.”¹²⁴

Despite continued litigation threats, the stock market did not lose its faith in tobacco shares. In an article which researches the influence of litigation on stock prices of tobacco shares, three economists concluded that after the MSA, there was a decline in systematic risk for tobacco stock. The risk was measured by the variance between the returns of a portfolio combined of tobacco shares and that of a diversified [efficient] portfolio.¹²⁵ According to their research, “[t]here was no significant change in systematic risk during the litigation period.”¹²⁶ The restrictions placed on civil liability and on punitive damages by the MSA and further legislation, allowed the tobacco companies to budget their legal costs, thereby ensuring stability and predictability.¹²⁷ Furthermore, the “addictive nature of cigarettes” also contributed to the industry’s continued market power.¹²⁸ According to the study, initial litigation had hurt tobacco, but after the MSA was implemented the risks dropped and tobacco shares remained attractive for buyers.¹²⁹ Despite the fact that the tobacco industry was not immediately hit with deadly legal damages, in the long run cases like the Engle Progeny case could have considerable influence on the financial situation of tobacco companies, forcing tobacco companies to raise the prices of their products and so eventually diminish the number of smokers. Selling a hazardous product continues because the legal damages the industry has to pay are nowhere near the profit it makes selling them.