By David Yucht, J.D.
Although the RICO judgment in U.S. v. Philip Morris USA, Inc. was "monumental," it did "not represent the universe of tobacco litigation" and the finding of nicotine spiking in that case was not given preclusive effect in the product liability case at bar.
Following remand from the U.S. Court of Appeals for the Second Circuit, the federal district court in Connecticut adopted a fairness analysis as required by the appellate court and determined that it would be unfair to apply non mutual offensive collateral estoppel against Philip Morris USA Inc. in a lawsuit by the estate of a deceased smoker against the cigarette maker. Consequently, it was not appropriate that a jury be instructed that Philip Morris had spiked nicotine levels in its cigarettes. Accordingly, a previously entered jury verdict in favor of the manufacturer was not disturbed (Bifolck v. Philip Morris USA Inc., May 12, 2020, Underhill, S.).
A woman began smoking Marlboro brand cigarettes in the early 1970s and stopped shortly before her death from lung cancer in 2000. In 2006, her estate sued Philip Morris USA Inc. under the Connecticut Product Liability Act, alleging that the company’s Marlboro cigarettes were negligently designed and contained toxic materials that caused the smoker’s death. Shortly before trial, the estate moved to give preclusive effect to certain factual findings made in a civil Racketeer Influenced and Corrupt Organizations (RICO) Act case against Philip Morris and other cigarette manufacturers before the federal court in the District of Columbia,U.S. v. Philip Morris USA, Inc.(449 F. Supp. 2d 1 (D.D.C. 2006)), which found that the cigarette makers had violated the RICO Act, in part by intentionally designing cigarettes to make them more addictive. In that case, after a finding of liability, the court required Philip Morris to issue a statement admitting that it had spiked the levels of nicotine in its product. In the case at bar, the trial court denied the estate’s motion to give preclusive effect to this statement and, after a two-week trial, a jury found in Philip Morris favor. The estate appealed, arguing that the trial court misapplied the non mutual offensive collateral estoppel standard.
Second Circuit decision. Non mutual offensive collateral estoppel is a type of issue preclusion that prevents the relitigating of an issue by a defendant that had previously had litigated the issue and had lost to another plaintiff. The Second Circuit agreed with the estate, however, it found that the trial court’s error did not require vacatur of the judgment. Rather, the court of appeals remanded the case and directed the lower court to consider whether the application of non mutual offensive collateral estoppel would be unfair [see Products Liability Law Daily’s August 22, 2019 analysis]. The Second Circuit noted that four conditions must be satisfied to invoke non mutual offensive collateral estoppel. The issue in the current and former case must be identical and it must have been litigated in the earlier proceeding. Additionally, "there must have been a full and fair opportunity for litigation in the prior proceeding," and this issue must have been necessary to support a judgment on the merits. Moreover, trial courts "must ensure that application of the doctrine is not unfair."
Here, the decedent’s estate requested that the trial court give preclusive effect to a factual finding about Philip Morris’s knowledge and corporate practices. This finding supported the estate’s theory at trial, including the claim that Philip Morris could produce safer cigarettes by reducing "the nicotine to nonaddictive levels." According to the Second Circuit, Philip Morris’s argument that the identicality prong necessitated that the identical issues be issues that were required to be proven for a finding of liability was mistaken. It sufficed that the issue decided in the prior proceeding was identical to the issue as to which preclusion was sought. The appellate court additionally disagreed with the trial court’s conclusion that the issues in these two cases were not identical because the scope of the two cases and the causes of action asserted therein were different.
The Second Circuit also disagreed with the trial court’s ruling that the issue in the case at bar was not "necessary to support a valid and final judgment on the merits" in the earlier case. An issue is deemed necessary or essential when the outcome hinges on it. The necessity requirement is met when, as here, the issue was essential to the remedy imposed, even if the issue was not essential to a finding of liability. Although Philip Morris could have been held liable in the former case even if the court had not found that it had intentionally spiked the level of nicotine in its products, the remedy in that case—i.e., Philip Morris’s public statement regarding nicotine levels—would not have been possible without that finding.
After determining that the conditions for invoking non mutual offensive collateral estoppel had been met, the Second Circuit remanded the case to the trial court to determine whether the application of this doctrine would be unfair. Concerning fairness, the lower court had indicated that if it had to decide this issue, it likely would have concluded that there were equitable considerations making the use of non mutual offensive collateral estoppel inappropriate in this case. According to the appellate court, it was not clear what the trial court was relying on or if it would maintain this view on remand.
Collateral estoppel. On remand, the federal district court held that granting preclusion in this case would have been unfair and it re-affirmed that it was correct for the jury not to be instructed that Philip Morris had previously spiked nicotine levels in its cigarettes. Thus, the trial judge held that giving preclusive effect to the nicotine spiking issue would have been unfair at trial and would still be unfair. The court explained that the timing of the estate’s preclusion motion and the way it was presented were problematic. Although this case had been pending for over 10 years, the estate filed its preclusion motion only three weeks prior to trial and had not previously indicated its intent to do so. There was no earlier mention that the estate would be requesting that certain issues be taken out of the case by giving the RICO case findings on nicotine spiking preclusive effect. Because of its timing, granting the preclusion motion would have meant that Phillip Morris had engaged in needless discovery, motion practice, expert witness preparation, and other trial preparation. Also, the timing of the estate’s motion was unfair to the court, making it unnecessarily rush an important decision.
The district judge additionally expressed concern that granting the preclusion motion would have caused the jury to reflexively find for the estate without giving the case its due consideration. Furthermore, granting the motion would not have provided significant gains in efficiency and would have been fundamentally unfair because of the differences in the "scope, type, and complexity" between the prior RICO case and this case. Although the RICO case was "monumental," the judge felt that it did "not represent the universe of tobacco litigation."
The differences between the RICO case and the current case were many. In the RICO case, which concluded in 2006, the federal government sued many tobacco companies, including Phillip Morris, alleging that they acted together to defraud the public. A judge found that over the course of 50 years, tobacco companies knew that nicotine caused addiction, lied about it, and spiked their cigarettes with nicotine to ensure addiction. Here, based on a Connecticut statute, a single estate sued one tobacco company alleging that it negligently designed two products after 1970. Also, the case here was a jury trial whereas the RICO matter was a bench trial.
Although some courts have given preclusive effect to findings from non-jury trials, many courts have declined to give preclusive effect to issues decided in the RICO case in part based on the potential unfairness of depriving jury trials to tobacco companies. The judge here also considered whether the RICO judgment relied on by the estate was consistent with previous judgments in favor of tobacco companies. The number of favorable verdicts for tobacco companies in cases like the RICO case made the judge here hesitant about granting preclusive effect to the nicotine spiking issue. These other verdicts indicated that some juries have found something inconsistent with the RICO judgment and the cases they considered. The district court continued by explaining that giving preclusive effect to the nicotine spiking issue still would be unfair as of the time of his writing the opinion. Ruling in the estate’s favor now would cause much more prejudice to the tobacco company than it would have at the time of trial because it would require vacatur of a favorable judgment, followed by a new trial.
The case is No. 3:06-cv-01768-SRU.
Attorneys: David S. Golub (Silver, Golub &Teitell LLP) for Vincent J. Bifolck. Christopher V. Cotton (Shook, Hardy & Bacon, LLP) for Philip Morris USA Inc.
Companies: Philip Morris USA Inc.
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