Products Liability Law Daily Huge compensatory and punitive damage awards upheld in smoker’s Engle case against tobacco companies
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Wednesday, March 25, 2020

Huge compensatory and punitive damage awards upheld in smoker’s Engle case against tobacco companies

By Robert B. Barnett Jr., J.D.

Compensatory damages of $15.8 million was reasonable given the smoker’s life-threatening medical condition and severe pain and suffering as a result of his cigarette habit.

In a suit by a lifelong smoker against two cigarette manufacturers,a three-judge panel of the U.S. Court of Appeals for the Eleventh Circuit upheld as reasonable a jury award of $15.8 million in compensatory damages and $25.3 million in punitive damages against the tobacco companies. Though higher than the amounts awarded in most similar cases, the damages were reasonable, given that the smoker had suffered from chronic obstructive pulmonary disease (COPD) every day of his life since 1993 and that the tobacco companies were guilty of a reckless disregard for the health of their customers, the panel said (Kerrivan v. R.J. Reynolds Tobacco Co., March 24, 2020, Pryor, J.).

The case at bar is an Engle progeny case, arising from a class action filed in Florida state court against tobacco companies on behalf of Florida-resident smokers who developed smoking-related illnesses caused by addiction to nicotine in cigarettes (Engle v. Liggett Group, Inc., 945 So. 2d 1246 (Fla. 2006). In Engle, following a jury trial in which the jury found that each company had breached its duty of care and sold defective cigarettes, the Florida Supreme Court approved in part and vacated in part the jury’s verdict finding liability, vacated the award of punitive damages, and decertified the class, instructing Engle class members to proceed on individual actions to resolve any remaining individual issues and to recover damages.

The state high court instructed that certain findings would have preclusive effect in future individualized actions, including that smoking cigarettes causes certain diseases, nicotine is addictive, the tobacco companies were negligent, and the tobacco companies placed cigarettes on the market that were defective and unreasonably dangerous. Thousands of individual suits were then filed in state or federal court. The current case is one of those suits and was filed in the U.S. District Court for the Middle District of Florida.

Plaintiff’s illness and injuries. A Florida resident, the plaintiff began smoking cigarettes at age 14, and by age 20 he was smoking a pack per day. At one point, he switched to filtered cigarettes to help him quit, but the reduced levels of tar and nicotine just made him smoke two packs a day instead of one. His switch to "ultra light" cigarettes caused his habit to increase to three packs a day. After 30 years of smoking, he was diagnosed in 1993 with chronic obstructive pulmonary disease (COPD) from his nicotine addiction. He now suffers from severe, end-stage COPD and lives tethered to an oxygen tank. It takes him two hours to get dressed and an hour and a half to shower because the extra effort exhausts him. His fear of dying from pneumonia has caused him to avoid other people, and he lives life in and out of emergency rooms.

In his individual suit against the tobacco companies, the jury found in favor of the smoker on all counts and awarded him $15.8 million in compensatory damages. On comparative fault, the jury determined that the smoker was 19 percent at fault, Philip Morris was 50 percent at fault, and R.J. Reynolds was 31 percent at fault. In Phase II, the jury awarded $25.3 million in punitive damages—$15.7 million against Philip Morris and $9.6 million against R.J. Reynolds. The trial court then denied the tobacco companies’ post-trial motions, and the companies appealed those denials to the Eleventh Circuit. On appeal, the cigarette manufacturers raised three issues: (1) whether the compensatory damages award was reasonable; (2) whether the punitive damages award was constitutional; and (3) whether the trial court erred in allowing the smoker’s fraud-based claims to go to the jury.

Compensatory damages.While review of whether a jury award was excessive under Florida law typically involves weighing several factors, the tobacco companies focused on one in particular: whether the amount awarded indicated passion, prejudice, or corruption against the defendant. In examining the smoker’s damages, the Eleventh Circuit panel recounted his rather grim current existence, about which it observed that "[e]very aspect of his life has been affected by his disease—even breathing is a constant struggle." The panel then concluded that no evidence existed that the award was the result of passion, prejudice, or corruption against the tobacco companies. Instead, it "reflected the jury’s consideration of the evidence presented at trial." The panelwent through the remaining four factors that the tobacco companies had not focused on and found that all of them weighed in favor of a finding of a reasonable damages award.

The appellate panel rejected the tobacco companies’ argument that the award was both higher than the amount requested by the smoker’s attorney in closing arguments and significantly higher than what had been awarded in similar cases. First, noting a Florida high court decision, the panel found that comparing similar cases can be "fraught with danger" because each case’s facts are different. Furthermore, even though the damages in the instant case were higher than in other Engle progeny cases, the $15.8 million awarded by the jury did not obviously exceed the reasonable range within which the jury may properly operate because the facts in the case at bar were different from those in cases with lower awards. As for the closing argument issue, the smoker’s attorney asked the jury for $10 million but told them that they could award a higher or lower amount. When the jury chose to exceed that $10 million, given that the tobacco companies offered no alternative amount, the jury had a right to increase the amount after hearing the evidence. Its choice to increase the requested amount did not justify a new trial, the panel held.

Punitive damages. Next, the tobacco companies argued that the punitive damages award was unconstitutionally excessive because it was disproportionate to the harm that the smoker suffered. In BMW of N. Am., Inc. v. Gore, 517 U.S. 559 (1996), the U.S. Supreme Court established three measures of whether a punitive damage award was excessive: (1) a defendant’s degree of reprehensibility; (2) the disparity between the harm and the award; and (3) the difference between this remedy and others imposed in similar cases. Reprehensibility, in turn, is determined by five considerations. The panel concluded that four of the five considerations weighed against the tobacco companies: the harm caused was physical rather than economic; the tortious conduct evinced a reckless disregard for the health of others; the conduct was repeated; and the harm resulted from intentional deceit. Despite knowing that cigarettes were addictive and linked to serious health conditions, the tobacco companies not only concealed those adverse effects, but they also designed products to deliver even higher doses of nicotine. As a result, the reprehensibility factor (which was characterized as the most important factor) weighed in favor of a reasonable finding of punitive damages.

As for the second measure, once the tobacco companies lost the compensatory damages argument, their argument about disparity was doomed. The ratio of compensatory to punitive damages in this case was about 1.6:1—a bit closer to 2:1 if you take out the smoker’s 19 percent responsibility. Courts have upheld far higher ratios of 4:1, 5.5:1, 7.5:1, and even higher; therefore, the ratio here was significantly lower than ratios that other courts have accepted as satisfying due process, the appellate panel said. Consequently, this factor weighed in favor of upholding the award. The final measure—comparing comparable cases—was accorded less weight in the reasonableness analysis than the other factors. Even if this factor were to be deemed to weigh against the award, which the panel was not willing to concede, the other two factors merited a conclusion that the punitive damages award was not excessive.

Fraud claims.Finally, the tobacco companies argued that the trial court erred when it allowed the fraud-based claims to go to the jury because no evidence existed of the smoker’s detrimental reliance on their concealment. However, the Eleventh Circuit rejected that argument, finding sufficient evidence of reliance in the smoker’s statements that he was influenced in his smoking decisions by the tobacco companies’ "sustained and pervasive disinformation campaign." As a result, the lower court did not err in submitting the fraud claims to the jury.

Therefore, the trial court’s denial of the tobacco companies’ post-trial motions was affirmed.

The case is No. 18-13045.

Attorneys: Kenneth S. Byrd (LieffCabraserHeimann& Bernstein, LLP) for Kenneth Kerrivan. Scott A. Chesin (Mayer Brown LLP) for R.J. Reynolds Tobacco Co. and Phillip Morris USA, Inc.

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

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