Public Health Benefits of Recent Litigation Against the Tobacco Industry

As with lawsuits involving other dangerous products, litigation against the tobacco industry can serve several important functions. Lawsuits can compensate individuals harmed by the product and can serve a public health purpose by encouraging manufacturers to change their products, sales, or marketing strategies to reduce risks. Information obtained in litigation also can be used to support future regulatory action.¹

Litigation against the tobacco industry has met with mixed success.² Between 1954 and 1994, private citizens filed more than 800 lawsuits against tobacco manufacturers.³ The tobacco companies achieved great success in court during this time by challenging the science that tied smoking to negative health consequences, by arguing that smokers knew they were taking a risk when they smoked, and by suggesting that smokers' lifestyles, rather than smoking itself, contributed to their illnesses.⁴ Only 2 courts found in favor of a private citizen, and both of these decisions were subsequently reversed on appeal.^{5 - 6}

In the mid-1990s, however, the attorneys general of all 50 states sued several of the major cigarette manufacturers to recoup health care and other costs incurred by the states due to smoking-related illnesses.⁷ This litigation led to negotiations between the 4 major tobacco companies and 46 states that resulted in the Master Settlement Agreement (MSA) in 1997. The MSA required the states to drop any pending litigation against the 4 companies in exchange for more than $200 billion to be divided among the states. The MSA also included restrictions on the marketing and advertising of tobacco products as well as provisions to limit advertising that targeted youth.⁸ The public health benefits of the MSA have been a matter of some controversy, however, as most states have failed to devote the majority of their settlement to reducing tobacco consumption.⁹

Recently, a new group of lawsuits has been brought against the industry, often emphasizing the ways in which tobacco manufacturers have allegedly deceived consumers.¹⁰ Two influential cases decided in 2006 are emblematic of this latest wave of lawsuits—Engle v Liggett and United States v Philip Morris. Both were widely reported as substantial victories for the tobacco industry.^{11 - 12} But a closer examination of the decisions suggests that while they may have provided short-term victories for the industry, the longer-term effects may well be a boon to public health.

This commentary will examine the Engle and Philip Morris decisions and consider the potentially important implications of these cases for public health.

In May 1994, 6 individuals with smoking-related health conditions filed a lawsuit in Florida that may significantly change tobacco litigation and how the tobacco industry does business. In this class action lawsuit against the major domestic cigarette manufacturers, the named plaintiffs sought to represent “all United States citizens and residents, and their survivors, who have suffered, presently suffer or have died from diseases and medical conditions caused by their addiction to cigarettes that contain nicotine.”¹³ The case proceeded as a class action lawsuit but the class was limited to Florida smokers.

The plaintiffs argued that they were “unable to stop smoking because they were addicted to nicotine and, as a result, developed medical problems ranging from cancer and heart disease to colds and sore throats.”¹³ They sought compensatory damages for the costs of the harm they had experienced and punitive damages to punish what they argued was the industry's especially egregious conduct.

After a 2-year trial, the Engle jury concluded that the plaintiffs had proved that cigarette smoking was addictive, that it caused numerous diseases, and that the cigarette industry's conduct had given rise to liability for negligence, fraud, and breach of the product's warranty. The jury awarded the remaining 3 class representatives $12.7 million in compensatory damages, and the class as a whole $145 billion in punitive damages. The cigarette manufacturers appealed the ruling.¹³

On May 21, 2003, the Florida Court of Appeals reversed the trial court's decision to allow the case to proceed as a class action lawsuit and overturned the damages award. The plaintiffs subsequently appealed this decision to the Florida Supreme Court. In December 2006, the Florida Supreme Court issued its landmark ruling, reinstating most of the jury's findings regarding causation and liability but overturning the $145 billion punitive damages verdict.¹⁴ The court upheld the compensatory damages verdict for 2 plaintiffs but decided that the third plaintiff's claim had not been filed in time.

Most importantly, the Florida Supreme Court affirmed the trial court's ruling that smoking cigarettes causes numerous diseases and health conditions, including: “aortic aneurysm, . . . cerebrovascular disease, . . . chronic obstructive pulmonary disease, coronary heart disease, . . . complications of pregnancy, . . . peripheral vascular disease,” and many forms of cancer.¹⁴ The court also agreed that “the defendants placed cigarettes on the market that were defective and unreasonably 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.”¹⁴

Regarding punitive damages, the Florida Supreme Court concluded that the $145 billion award was excessive. Therefore, entitlement to punitive damages, if any, could only be determined on a case-by-case basis in future individual lawsuits.

In 1999, the US government brought a case against the tobacco industry alleging that the companies had, over several decades, repeatedly violated the federal Racketeer Influenced and Corrupt Organizations (RICO) Act. The RICO Act applies to businesses that conspire to and then impact interstate commerce through racketeering activities. The government argued that the tobacco companies 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. The government also alleged that cigarette manufacturers falsely claimed that “low-tar” or “light” cigarettes are less harmful, intentionally marketed tobacco products to persons younger than 21 years, and deliberately concealed evidence to prevent the public from learning about the dangers of smoking.¹⁵

The government asked that the tobacco industry be prevented from using deceptive marketing practices, and sought the return of $289 billion in past profits that the industry earned through its allegedly illegal, conspiratorial activities. However, a 2005 ruling by a federal appeals court held that under the RICO Act only forward-looking remedies could be imposed on the industry, such as prohibiting future deceptive marketing.

In August 2006, Federal District Court Judge Gladys Kessler issued a 1742-page opinion in United States v Philip Morris, concluding that the industry had indeed violated the RICO Act.¹⁵ The decision proclaims that “[f]rom at least 1953 until at least 2000, each and every one of [the defendant tobacco companies] repeatedly, consistently, and vigorously—and falsely—denied the existence of any adverse health effects from smoking. Moreover, they mounted a coordinated, well-financed, sophisticated public relations campaign to attack and distort the scientific evidence demonstrating the relationship between smoking and disease, claiming that the link between the two was still an ‘open question.’”¹⁵ As in Engle, the Court's factual findings confirm that the tobacco industry knew of nicotine's addictive nature for decades but tobacco companies “endeavored to keep the extensive research and data they had accumulated out of the public domain and out of the hands of the public health community by denying that such data existed, by refusing to disclose it, and by shutting down or censoring laboratories and research projects which were investigating the mechanisms of nicotine.”¹⁵

The Court used several remedies to punish the industry for its RICO violations, including an injunction that prohibits tobacco companies from using deceptive brand descriptors such as low tar and light. Tobacco companies also must issue statements about the negative health effects of smoking through retail displays and print and television media. In addition, the tobacco companies must disclose their marketing data to the government.

The tobacco companies immediately appealed the decision and on October 31, 2006, a federal appeals court granted a stay of Judge Kessler's decision pending that appeal.¹⁶

When Engle was decided, national newspapers described the verdict as a “major legal victory,”¹⁷ “highly favorable to cigarette makers,”¹⁸ and as lifting “one of the biggest financial clouds over tobacco companies.”¹⁹ Similarly, on the day the Philip Morris verdict was announced, a Wall Street analyst was quoted as saying, “There's nothing in this ruling that is going to hurt the profitability of the businesses.”¹²

Although neither Engle nor Philip Morris will immediately cost the tobacco industry billions of dollars in punitive damages or require the return of past profits, both cases appear to represent a substantial future threat to the industry and a corresponding potential benefit for the public's health. As a result of Engle, individual plaintiffs may now more successfully bring separate lawsuits against the cigarette industry. At those individual trials, the plaintiffs will not have to prove that cigarette smoking is addictive or that cigarettes cause cancer or other health problems. These issues have already been established by Engle. Just as important, plaintiffs need not reestablish the legal basis for liability because it will be presumed that the cigarette industry was negligent, engaged in fraud by concealment, and sold defective products.

By thereby reducing the high cost of litigation against the tobacco industry, Engle also should make such cases far more attractive for attorneys considering representing sick plaintiffs or their survivors. In fact, major Florida law firms have been actively soliciting clients since Engle.²⁰ As a result, the tobacco industry may be forced to defend thousands of Florida lawsuits without being able to use its usual strategy of denying the health consequences of smoking or the addictive effects of nicotine. The potential for public health benefits from Engle was underscored by the filing of friend-of-the-court briefs supporting the plaintiffs on behalf of, among others, the American Public Health Association and the American Medical Association.

Philip Morris also may have an important impact on industry conduct and upcoming litigation. The opinion presents detailed factual findings documenting decades of illegal industry activity. In addition, the government can now use the tobacco industry's marketing data to monitor the industry's attempts to target youth. If the decision is upheld on appeal, cigarette makers will no longer be allowed to mislead consumers that light or low-tar cigarettes are safe. Research has demonstrated that so-called light cigarettes may encourage some persons to continue smoking but do not lower nicotine and tar intake or reduce the risk of developing smoking-related cancers.²¹ Even if Philip Morris is reversed on appeal, the opinion provides a roadmap for future litigation based on industry fraud, conspiracy, and misrepresentation.

Despite this markedly improved litigation environment, however, the industry is not without defenses. Each post-Engle Florida plaintiff will still have to prove that cigarette smoking caused his or her own illness and the amount of damages he or she experienced. In any individual lawsuit, the industry may try to demonstrate that some other factor was the likely cause of the plaintiff's illness or that the plaintiff should bear some or all of the blame. The tobacco industry has a long-standing policy of using procedural mechanisms to delay the litigation process, hoping that plaintiffs will die, tire, or simply run out of resources.

It is difficult to predict the future effects of any lawsuit. But, Engle and Philip Morris are in some respects significantly different from prior litigation efforts in that they potentially presage, by their findings, the success of future litigation. This differs sharply from the MSA, which expressly repressed future litigation. Additionally, Engle and Philip Morris may have other important effects. Publicity associated with these and other recent lawsuits, and the information they have generated, may help to further denormalize smoking and reduce the perceived legitimacy of the tobacco industry. As a result, policymakers may be more willing to seek legislation regulating the industry, such as the Family Smoking Prevention and Tobacco Control Act now pending in Congress.²² Similarly, the public may be more willing to support restrictions on smoking including efforts to ban smoking in indoor public places. In this changing litigation and regulatory environment, Engle and Philip Morris can have a greater public health impact than prior litigation.

Ultimately, the tobacco industry may experience an increased cost of doing business as a result of Engle, Philip Morris, and litigation and/or regulation likely to follow. Costs of litigation and regulation are generally passed on to consumers in the form of higher prices. Research indicates that higher prices can result in less cigarette consumption, especially among more price-sensitive young people.^{23 - 24} Therefore, if future lawsuits are more likely to be brought and to succeed as a result of Engle and Philip Morris, some of the more than 400 000 smoking-related deaths in the United States each year might be prevented.²⁵