Products Liability Law Daily High Court rejects cigarette makers’ request to review due process, preemption rulings in Engle-progeny case
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Tuesday, January 9, 2018

High Court rejects cigarette makers’ request to review due process, preemption rulings in Engle-progeny case

By Susan Engstrom

The U.S. Supreme Court has denied a request by cigarette manufacturers R.J. Reynolds Tobacco Company and Philip Morris USA Inc. to review an Eleventh Circuit decision holding that it was not a violation of the Due Process Clause to give a jury’s finding of negligence and strict liability in a class action against the companies preclusive effect in a later individual suit by a class member, and that federal law did not preempt that jury’s findings. The tobacco companies had filed four other petitions with questions concerning due process and preemption in similar Engle-progeny cases, but agreed that the one at bar was the "ideal vehicle" for the High Court to consider these issues (R.J. Reynolds Tobacco Co. v. Graham, filed September 15, 2017; cert. denied January 8, 2018).

Engle class. In 1996, a Florida appellate court approved certification of a class action lawsuit encompassing an estimated 700,000 Floridians who brought state-law damages claims against the major American tobacco companies for medical conditions caused by their (or their decedents’) addiction to nicotine-containing cigarettes. A class-wide trial (Phase I) to determine issues common to the class, including causation, resulted in a jury verdict for the class on all counts. While the Florida Supreme Court in Engle v. Liggett Group, Inc., 945 So. 2d 1246 (Fla. 2006), decertified the class, it held that the jury findings would have "res judicata effect" in individual cases brought against one or more of the tobacco companies by a former class member. Later, in Philip Morris USA, Inc. v. Douglas, 110 So. 3d 419 (Fla. 2013), the state high court further determined that affording the Phase I findings res judicata effect was an application of claim preclusion, not issue preclusion. Thus, all that remained to be litigated in individual trials was individual causation, connecting the Engle defendants’ addictive cigarettes and the injury sustained by an individual plaintiff, and damages.

Trial and verdict. In the current case, the widower and personal representative of the estate of a deceased smoker filed an individual Engle action in the district court alleging that his wife developed lung cancer and died because of her addiction to cigarettes manufactured by R.J. Reynolds and Philip Morris. He asserted claims of strict liability, breach of warranty, negligence, fraudulent concealment, and conspiracy to fraudulently conceal. Under the Engle framework articulated in Douglas, the jury was not asked to find that the cigarettes the decedent smoked were defective or that the tobacco companies were negligent. Rather, the district court treated those findings as having already been established. For the claims of negligence and strict liability, the jury was asked to determine only whether the decedent was a member of the Engle class and whether smoking cigarettes manufactured by the two tobacco companies "was a legal cause" of her injuries. The trial court instructed the jury that, to find legal causation, the decedent’s addiction to cigarettes must have "directly and in natural and continuous sequence produced or contributed substantially to producing" her injuries.

The jury found for the widower on the claims of strict liability and negligence, and awarded him $2.75 million in damages and determined that the decedent was 70 percent at fault, R.J. Reynolds was 20 percent at fault, and Philip Morris was 10 percent at fault. The district court entered judgment against R.J. Reynolds for $550,000 and against Philip Morris for $275,000. The tobacco companies’ motion for judgment as a matter of law was denied. Another relative later replaced the widower as personal representative of the decedent’s estate.

Eleventh Circuit’s prior decisions. An Eleventh Circuit panel reversed the judgment of the district court, holding that the Engle findings of strict liability and negligence were preempted by federal law [see Products Liability Law Daily’s April 9, 2015 analysis]. The appellate court later granted the estate representative’s petition for rehearing en banc and vacated the panel opinion [see Products Liability Law Daily’s January 25, 2016 analysis]. The appellate court allowed the parties to brief both the preemption issue and the question of whether giving effect to the jury’s findings in Engle would "violate the tobacco companies’ rights under the Due Process Clause of the Fourteenth Amendment to the United States Constitution notwithstanding the panel’s holding" in Walker v. R.J. Reynolds Tobacco Co., 734 F.3d 1278 (11th Cir. 2013). In Walker, the appellate court held that giving res judicata effect to the findings of the jury in Engle did not violate the rights of the tobacco companies to due process. Recently, the Florida Supreme Court ruled in R.J. Reynolds Tobacco Co. v. Marotta, No. SC16-218 (Fla. April 6, 2017) [see Products Liability Law Daily’s April 10, 2017 analysis], that federal law does not preempt "state tort" actions against the tobacco companies and that, even if federal law preempted a ban on the sale of cigarettes, the Engle Phase I findings did "not amount to … a ban" that might conflict with federal law.

Due process. In the current case, the Eleventh Circuit first held that giving full faith and credit to the Engle jury findings of negligence and strict liability did not deprive the cigarette manufacturers of property without due process of law. R.J. Reynolds and Philip Morris argued that the Due Process Clause mandates that an issue be actually decided in one case before it is given preclusive effect in another. The appellate court found, however, that even assuming, without deciding, that the "actually decided" requirement is a fundamental requirement of due process, no violation of due process occurred when the district court gave the Engle findings preclusive effect. After reviewing the Engle proceedings, the court was satisfied that the Engle jury actually decided common elements of the negligence and strict liability of R.J. Reynolds and Philip Morris. The Eleventh Circuit was satisfied with the Florida Supreme Court’s findings in Douglas, and stated that the only way to make sense of the proceedings was that the Florida courts determined that the Engle jury actually decided issues common to the class, and the district court did not abrogate a protection against arbitrary deprivations of property in affording the Phase I jury’s findings preclusive effect in the current case.

Preemption. The Eleventh Circuit next concluded that the Engle jury findings of negligence and strict liability were not preempted by federal law. The tobacco companies argued that the obstacle form of conflict preemption defeated the findings of negligence and strict liability in Engle, and that federal law preempted state law claims premised on the theory that all of the cigarettes manufactured by the tobacco companies are inherently dangerous. The appellate court disagreed, however, concluding that the federal tobacco laws did not preempt state tort claims based on the dangerousness of all the cigarettes manufactured by the tobacco companies. Nor did federal law preempt the Engle jury findings—affording preclusive effect to the Engle jury findings did not frustrate the objectives of federal laws on tobacco.

Petition. In their petition to the High Court, the tobacco companies had posed the following questions:

  1. When there is no way to tell whether a prior jury found particular facts against a party, does due process permit those facts to be conclusively presumed against that party in subsequent litigation?
  2. If the Engle jury's findings are deemed to establish that all cigarettes are inherently defective, are claims based on those findings preempted by the many federal statutes that manifested Congress’ intent that cigarettes continue to be lawfully sold in the United States?

These questions echoed those presented by the companies in Philip Morris USA Inc. v. Naugle (Docket No. 17-400, filed September 15, 2017) and Philip Morris USA Inc. v. Lourie (Docket No. 17-401, filed September 15, 2017) [see Products Liability Law Daily's September 19, 2017 analysis], as well as R.J. Reynolds Tobacco Co. v. Block (Docket No. 17-443, filed September 25, 2017) and R.J. Reynolds Tobacco Co. v. Turner (Docket No. 17-638, filed October 30, 2017) [see Products Liability Law Daily’s November 3, 2017 analysis]. The NaugleLourieBlock, and Turner petitions all requested that they be held by the High Court pending resolution of the Graham petition.

The case is Docket No. 17-415.

Attorneys: Paul D. Clement (Kirkland & Ellis LLP) for R.J. Reynolds Tobacco Co. Miguel A. Estrada (Gibson, Dunn & Crutcher LLP) for Philip Morris USA Inc. Jason L. Lichtman (Lieff Cabraser Heimann & Bernstein, LLP) for Theresa Graham.

Companies: R.J. Reynolds Tobacco Co.; Philip Morris USA Inc.

MainStory: TopStory SupremeCtNews ClassActLitigationNews TobaccoProductsNews

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