A new post on Eye on the Trials provides a concise summary of the tobacco companies losing a series of defense motions launched at the conclusion of the plaintiff's case, including a motion to dismiss for lack of evidence. One hopes big tobacco continues to lose on all issues. It's well past time to end the massive economic and human harms caused by smoking.

In my view, virtually all employers (including my law firm) subsidize big tobacco in several ways. For example, employers pay health  insurance premiums and worker's compensation payments that are increased because of illness and disease in persons whose immune systems are compromised by their employees who smoke (or did smoke). We likewise collectively eat part of the cost (through income taxes) for free or subsidized low cost medical care provided to smokers via  Medicare, Medicaid and charity care payments. Certainly asbestos defendants are providing major subsidies to tobacco companies as they pay for cancers and non-malignant diseases mainly or exclusively caused by smoking. 

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Scientists continue to close in on fingerprints to show when, why and how cigarette smoke causes lung cancer. The latest paper takes the evidence another step down the path towards objective fingerprinting of cancers caused by cigarette smoke. 

The press release is online here, and pasted below: The full article is online at no cost. 

 Public release date: 15-Feb-2013 

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Objective, quantifiable science continues to prove the widespread impacts of tobacco smoke. This new study establishes second hand smoke inhalation in a car even when the front windows are wide open. 

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Secrecy in litigation: good, bad or otherwise?

Court orders for secrecy sometimes raise difficult issues and one understands a sealing order. Other times, the secrecy appears completely undeserved. A recent example of apparently undeserved secrecy is playing out in Canada in connection with tobacco companies seeking insurance payments for their expenses in defending tobacco cases. 

The unfolding story arises from a blog known as Eye on the Trials. The blog provides a daily summary of a lengthy, ongoing trial involving government cost recovery claims against the Canadian arms of tobacco companies - this FAQ page provides a summary of the trial issues.  

The secrecy issues arise from the December 12, 2012 post at Eye on the Trials. The post was writteny by Cynthia Callard, and summarized the contents of a tobacco company affidavit filed in a different case. Specifically, the affidavit identified underlying cases for which the tobacco companies were seeking reimbursement from a defunct insurance company (Kansa). The summary included a list of the underlying cases. As it turns out, the affidavit was supposed to be under seal and not accesible. However, things happened and the affidavit was left open in a court file, leading to the blog post summarizing the affidavit. 

In short order, however, the tobacco company obtained a court order requiring Eye on the Trial to delete the summary of the affidavit. That set of events is covered in a December 14, 2012 post on Eye on the Trials. 

As it happens, I subscribe by email to the Eye on the Trial blog posts, and so have an email copy of the now altered December 12, 2012 post. The text of that email is pasted below in full  so that readers can decide for themselves the appropriateness of the sealing order. I cannot see any reasonable justification for sealing a list of lawsuits against tobacco companies.  

 ________________________________________________________________________

"Day 94. Nineteen Documents. One hundred twenty-seven million dollars

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For asbestos litigation defendants, a recurrent fear is facing waves of lung cancer claims that we would today say are completely or mainly caused by cigarette smoking. Accordingly, most lung cancer claimants face interrogatories and deposition questioning about whether, how much and how long they smoked. 

Over time, science may also answer the questions, as suggested by research work discussed this week at one of the UK's pre-eminent conferences the NCRI Cancer Conference. How? "Researchers ... have identified a number of sites in the DNA of blood that have been chemically tagged as a result of smoking." That is, the smoking produced epigenetic changes." 

What does all this mean? Down the road, for litigators and their clients, it may mean an objective measure for determining the actual smoking history of a person.  For the person, it may mean a way to measure the risk of cancer arising from current or past smoking. Here is the abstract for the paper, and the complete press release is here. Key quotes are set out below:

"Dr James Flanagan, Breast Cancer Campaign scientific fellow at Imperial College London and co-author of the research, said: “This research may help to build a test that will be able to look at a person’s epigenetic information at the molecular level and measure in great detail the added risk of cancer from exposures such as smoking. 

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Australia's Supreme Court issued an order - but not yet a full opinion - upholding the constitutionality of a law requiring plain paper labels for cigarettes. The court thus rejects the claim that there is a "right" to use flashy packaging to sell the carcinogens commonly known as cigarettes. Common sense prevails. 

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A trial judge in New Brunswick has ordered the various tobacco defendants to answer New Brunswick's complaint by August 20. The complaint was filed in March 2008 after the passage of enabling legislation. 

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Tobacco.org and LAW360 brings news that big tobacco has once again lost on appeal in another large verdict in a post-Engle case. The case is captioned as Philip Morris USA Inc. v. Lucinda Naugle, and the opinion is here.  In the case, the trial judge had reduced the verdict to  $36.8 million after the jury originally had awarded $ 56.6 million in compensatory damages and $ 244 million in punitive damages.

Three holdings from the appellate court are key, and indicate why future losses are probable:

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The Madison County Record has the story on Illinois' GOP legislators leading the charge  to help protect big tobacco against big bonds in appeals with proposed legislation specific to tobacco companies.  Apparently big tobacco is not satisfied with rule changes the Illinois Supreme Court made to allow discretion on the size of bonds after massive verdicts. The effort has failed so far, but will be back. In view of Illinois' massive pension payments crisis, a cynic might think legislators are secretly hoping that tobacco-caused deaths will help reduce pension costs. 

The theme of supporters of the legislation seem to focus on state by state races to the bottom to protect big tobacco against big verdicts. Thus, the article states:

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Quebec has filed its suit against big tobacco for past and future expenses - the press release is here and the complaint is here, but in French.  The opening section of the press release is pasted below. 

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Big tobacco and the Republican party are opposing California imposing a $1 per pack tax that would be used to fund cancer research. Bog tobacco opposes the tax so that sales of carcinogens can continue at higher levels. If passed, the tax imposed by Proposition 29 would result in California becoming the second largest funder of cancer research, and the tax also would discourage smoking. The human and financial costs of smoking are obscene - millions of lung cancer deaths and $1.5 trillion in costs per year on a global basis - specifics here with links. 

For an interesting contrast, consider events in Saudi Arabia as to smoking. There, plans are being put in place to close down entities that sell tobacco to children. Pasted below is the lead paragraph from the article:

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The Edmonton Journal reports that Alberta is teeing up a $ 10 billion claim against big tobacco, and litigation also is being teed up by the other Canadian provinces which have not yet filed tobacco litigation. 

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California's Proposition 29 is a proposal to implement a $1.00 per pack increase in the price of cigarettes (and equivalent increase on other tobacco products) to fund research into cancer and tobacco-related diseases as well as prevention and education programs. The issues goes to the ballot box during California's June 5 primary.  

Maplight has compiled numbers on contributed funds, and puts big tobacco's contributions at over $ 40 million. Maplight finds a $1.4 million in contributions from the California Republican Party. Maplight's collected data is here.

The good guys, in contrast, have far less funding at about $ 11.7 million, mainly from the American Cancer Society and Lance Armstrong's Livestrong Foundation, and a $ 500,000 contribution from New York's Mayor Bloomberg. 

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Low dose CT scans to detect lung cancer are an example of using new technologies to try to reduce deaths by finding cancers earlier. And, low dose CT scans are the medical monitoring sought in the landmark case approved by the Massachusetts Supreme Court.  

New analysis of data finds that the scans do indeed reduce mortality for some, but there are still many variables and some false positives. The summary of the study is set out below - the entire study is available at JAMA's web site. This new study fits with prior news from NCI. 

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Tobacco smoking creates enormous amounts of disease and expense. The ACS and others estimate the annual global cost at $ 1.5 trillion - that's annually. So, Russia is now planning a series of actions to reduce smoking, including tax increases and banning smoking in various public places. One wonders - will tobacco litigation follow ?

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The Canadian tobacco trial continues, and Big Tobacco is trying emergency appeals to try to keep documents hidden under seal. The full story is here from Eye on the Trials. 

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The ongoing Canadian tobacco trial is being covered - in detail every day -  by a blog - here. The blog is known as: Eye on the Trials.

The blog is sponsored by a public interest group known as ASPQ, which appears to be involved in far more than just tobacco. 

Many lessons here for tobacco in particular, and defendants in general. 

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Tobacco industry defense is the driving force behind 25 or so lawyers exiting Shook, Hardy to join Hughes Hubbard. The Kansas City office of Shook Hardy is famous as the long time home for the national strategy for tobacco defense and defense of Phillip Morris. But today, Lorillard and Phillip Morris seek to have separate counsel, so lawyers are leaving Shook's Kansas City office to work for Hughes Hubbard in a new Kansas City office it is creating to serve Lorillard. AmLaw Daily has the story here. Excerpts follow on the tobacco litigation industry aspects of the moves:

"The Kansas City office opening is largely a product of the shifting regulatory landscape confronting Big Tobacco.

With the Food and Drug Administration turning up the heat on tobacco makers in recent years, industry rivals are increasingly at odds over how far regulators should go, says Stephen Sugarman, a professor at the University of California, Berkeley School of Law who has written extensively on tobacco litigation and regulation.

Philip Morris, Sugarman says, has generally been more supportive of stricter regulations, in part because  its dominance within the industry—in 2010, the company controlled nearly half the domestic retail market for cigarette sales—makes it more immune to those regulations. Bans on certain types of advertising, for example, would have less impact on a nationally recognized brand such as Philip Morris's Marlboro than on lesser known brands trying to elbow their way into the market, Sugarman says.

Until the 1990s, the industry presented more of a united front, says Sugarman. That unity began to crumble with the landmark $200 billion Tobacco Master Settlement Agreement in 1998, in part because the settlement stipulated that several industry groups disband, he says.

That tobacco industry rivals are following divergent paths is no different than what has happened in other industries, according to Murphy, who adds that Hughes Hubbard was the only firm in the running to take over Shook's Lorillard team.

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Thorax is an international medical journal, and is noted here because one of its October 2011 issues included a trio of  articles on smoking among young people and its relationship to movies showing smoking. The articles are here, here, and here.  Pasted below is the abstract from this article finding a cross-cultural study finding a positive correlation between teen age smoking and the portrayal of smoking in movies. One might debate the research methods, but the findings are provocative, especially for those of us who are parents of teen-agers, and see some of the kids making the mistake of lighting up.  

There also is a related a podcast, which is here. The podcast introduction states:

"We were delighted to speak to Professor John Britton about the research published in the October issue of Thorax, by his and other groups, on smoking in the young.

John is a chest physician, an epidemiologist and a former editor of Thorax. He is the director of the UK Centre for Tobacco Control Studies at the University of Nottingham. John has been a giant in tobacco research. He chaired the influential RCP Tobacco Advisory Group and played a major role in making the case for banning smoking in public places. Arguably, he has done more than anyone else in this country to limit tobacco exposure. We applaud his contribution." 

_______________________________________________________________________________

Abstract

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Amazing what's out there. This blog post by patent lawyer and molecular biologist  Kevin E. Noonan describes litigation over a tobacco company patent aimed at reducing carcinogens in tobacco. After decades of industry denial that cigarettes caused cancer, this seems rather surreal. Here's a key excerpt:

"The Federal Circuit reaffirmed the primacy of the factual disclosures used to establish obviousness, and how deficiencies thereof can defeat an obviousness claim, in reversing an invalidity determination in Star Scientific, Inc. v. R.J. Reynolds Tobacco Co.  It also showed how persistently defendants pursue the tarnish of inequitable conduct even under circumstances where the Federal Circuit has held that no inequitable conduct occurred.

The patents-in-suit, U.S. Patent Nos. 6,202,649 and 6,425,401 (filed as a continuation of the '649 patent), were directed to methods for curing tobacco in a way that reduced the amount of a carcinogen, tobacco-specific nitrosamines (TSNAs), in the cured product used in cigarettes and other tobacco-containing products.  The patents were specifically directed to "indirect" flue curing with gas or propane heaters.  Former methods used "direct" flue curing that mixed the exhaust gasses with the tobacco, but this resulted in an oxygen-free environment that fostered the growth of bacteria on the leaves, leading to production by the bacteria of the carcinogenic TSNAs.  The patented methods can be used with either direct or indirect curing methods by using "controlled conditions" involving humidity, temperature, rate of temperature exchange, carbon monoxide levels, carbon dioxide levels, oxygen levels, and how the tobacco plants are arranged in the curing shed.  The claims specify "controlling conditions" by "determining and selecting" the "appropriate" values for these variables that results in the reduction of TSNA production "at least one").  However, the patents admit that the choice of these conditions are "more art than science," so need to choose the appropriate combination of these variables; however, the important consideration is maintaining an aerobic environment that prevents bacterial growth. (emphasis added)

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Part 1 of this line of posts provides an introduction to a valuable resource for seeing the global tobacco litigation mosaic. The resource is a recent law review: “International Tobacco Litigation’s Evolution as a United States Torts Law Export: To Canada and Beyond?” ("ITL"). Written by Richard L. Cupp, Jr., a Pepperdine law professor and tort scholar, the ITL article is freely available on this page of SSRN, and was last updated February 13, 2011. Professor Cupp’s article begins with a broad survey of tobacco litigation, and then moves to some specific examples of and issues in ITL. 

Today’s post highlights one of the specific topics described by Professor Cupp: tobacco cost recovery litigation by provincial governments in Canada. The litigation apparently is going well for the plaintiffs, and provides a possible model for cost recovery litigation in other nations, and against other groups of defendants. ITL describes in some detail a cornerstone of the litigation - provincial statutes which provide for and govern the litigation. One of the novel statutes was upheld against a constitutional challenge by big tobacco in an opinion titled British Columbia v. Imperial Tobacco Canada, Ltd., 2005 SCC 49, [2005] 2 S.C.R. 473.  The decision is here. (Also, fyi, here is a Canadian Supreme Court decision on tobacco advertising legislation).

Professor Cupp's article provides significant analysis of the statutes, the ruling and related points. The article provides good reading for people interested in thinking about new possibilities. New thinking seems needed when one considers that we collectively pay the devastating human and financial prices for legislative failure to control the business of selling carcinogens intended for human ingestion. 

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Yesterday’s post noted the latest chapter in big tobacco’s many losses in smoking litigation in Florida regarding individual cancers and other injuries. Florida is a real problem for the tobacco industry. So is the Massachusetts Supreme Court's embrace of low-dose CT scans as medical monitoring appropriate for a subset of smokers and former smokers.  But, Florida and Massachusetts are just two parts of a much larger global mosaic of tobacco litigation. No doubt that’s why Philip Morris hired David Bernick away from Kirkland & Ellis to move to Switzerland to run its global litigation. 

A valuable resource for seeing the global tobacco litigation mosaic is a recent law review:  “International Tobacco Litigation’s Evolution as a United States Torts Law Export: To Canada and Beyond?”  ("ITL"). Written by Richard L. Cupp, a Pepperdine law professor and tort scholar, the ITL article is freely available on this page of SSRN, and was last updated February 13, 2011.  Professor Cupp’s article begins with a broad survey of tobacco litigation, and then moves to some specific examples of and issues in ITL.  Today’s post recaps some of the ITL article’s information on the scope of the litigation. Subsequent posts will address some of the specific points identified by Professor Cupp. The easy to read article should be read as a whole to feel the way that tort litigation is spreading globally, and to feel the examples provides as to the wide range of attitudes and outcomes related to ITL in particular, and tort litigation more generally.

As to the broad scope of tobacco litigation, footnote 18 of ITL describes the  “government cost recovery” lawsuits brought by a wide range of  nations.  According to Professor Cupp and his research team and sources, the governments bringing cost recovery suits are many, and:

“include Argentina, Australia, Bulgaria, Brazil, Canada, Chile, China, Columbia, Costa Rica, Finland, France, French Guiana, Germany, Greenland, India, Ireland, Israel, Italy, Japan, Kazakhstan, Mali, Marshall Islands, Niger, Nigeria, Norway, Pakistan, Philippines, Poland, South Korea, Spain, Sri Lanka, Uganda, United Kingdom, United States, and Venezuela.  See Lawrence O. Gostin, The “Tobacco Wars”—Global Litigation Strategies, 298 J. AM. MED. ASS’N 2537, 2537–38 (2007); Richard A. Daynard, Clive Bates & Neil Francey, Tobacco Litigation Worldwide, 320 BRIT. MED. J. 111, 112 (2000); D. Douglas Blanke, Towards Health with Justice: Litigation and Public Inquiries as Tools for Tobacco Control, WHO TOBACCO FREE INITIATIVE, http://www.who.int/tobacco/media/en/final_jordan_report.pdf (last visited Dec. 24, 2010); M.L. Flores et al., Litigation in Argentina: Challenging the Tobacco Industry, 15 TOBACCO CONTROL 90, 90–92 (2006), http://www.bvsde.paho.org/bvsacd/cd42/90.pdf; Andrew Walker, Nigeria Takes on Tobacco Giants, B.B.C. NEWS (Jan. 14, 2008, 0:23.stm; Mackay & Erikson, supra note 16, at 86–87.

Government medical cost recovery litigation of course is not the same as the Engle-type personal injury litigation brought to obtain compensation for individuals. The ITL article covers both categories of litigation. Thus, footnote 19 of the article recaps the nations where individuals have filed suits for diseases caused by smoking.  Footnote 19 states:

“Individual lawsuits against tobacco companies have been brought in numerous countries, some of which include Argentina, Ireland, Israel, Finland, France, Japan, Norway, Sri Lanka, Thailand, and Turkey. Daynard, Bates & Francey, supra note 18, at 111. One famous individual case was filed in Norway by Robert Lund who developed lung cancer from working in a smoky bar for fifteen years. See Blanke, supra note 18, at 40. Two other illustrations of these types of cases are Spasic v. Imperial Tobacco and Spasic Estate v. B.A.T. Industries p.l.c., filed in Canada, demanding millions in damages. See Tobacco-Related Litigation in Canada, NON-SMOKERS’ RIGHTS ASSOCIATION 22 (2009), http://www.nsra-adnf.ca/cms/file/pdf/Tobacco_Related_Litigation_in_Canada_ 2009.pdf. As of 2002, there were four private class actions pending in the Canadian Provinces of Ontario, Quebec and British Columbia. See Blanke, supra note 18, at 40.  Class actions have also been filed in Australia against the major Australian tobacco companies.  Daynard, Bates & Francey, supra note 18, at 112. Health care reimbursement lawsuits have been filed in the Canadian Province of British Columbia, as well as by the governmental health insurance body in France. Id. at 111. The government of the Republic of the Marshall Islands has brought a health care reimbursement case against international tobacco companies that supply the local market.  Id. Other countries, including Guatemala, Bolivia, Nicaragua, reimbursement suits pending in federal court in the United States.  Id.”

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Big tobacco took another hit in Florida as the state supreme court refused to hear an appeal from an intermediate appellate court decision on a post-Engle trial verdict for $ 28 million. AmLaw's Litigation Daily provides this fairly extensive article by David Bario with myriad links to opinions, past article and briefs.

The key take away? Big tobacco is anxious to undo its prior loss of a "limited issues" phase of a class action trial in Florida. The prior phase 1 class action win for all class members means that current plaintiffs (who were class members) do not have to prove facts already found to be true by the jury which heard the evidence in the phase 1 trial. That phase of the trial focused on industry's actions and the reality that smoking causes cancer in smokers and others. Applying those findings again to new trials makes it easier for class members to win current trials limited to individual issues not considered in phase 1 of the class action trial. Big tobacco hates that outcome, and seeks to undo the prior class action loss. 

If big tobacco finds a way to undo to the past, it will change class action law in a meaningful way. Its lawyers now plan to file a cert petition with the US Supreme Court. It will be interesting to see if Justice Scalia once again acts alone to protect big tobacco. The story on Justice Scalia's prior unilateral stay for big tobacco is covered in this prior post.

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Smoking imposes a staggering human and financial toll through the cancers it causes. Less well defined and known are the human and financial costs of birth defects caused by smoking during pregnancy. This  major new study from the UK helps to define the burden as it comprehensively reviews 50 years of scientific papers, and presents  the increased risk levels for numerous, severe birth defects.  Here are key excerpts from the ScienceDaily summary of the paper, followed by the more technically worded "results" section of the abstract for the paper. The results section provides the specific odds ratios, which some courts consider important to product liability claims. The full paper is here, and is an "open access" paper, meaning that the full text and tables are available from the journal's website at the link. 

"The study, published July 12 in Human Reproduction Update, is the first comprehensive review to identify the specific birth defects (malformations) most associated with smoking.

***

The authors examined a total of 172 research papers published over the last 50 years, which looked at a combined total of 174,000 cases of malformation alongside 11.7 million controls. The risk was increased by 26% for having a baby with missing or deformed limbs, 28% for clubfoot, 27% for gastrointestinal defects, 33% for skull defects, 25% for eye defects, and 28% for cleft lip/palate. The greatest increase in risk (50%) was for a condition called gastroschisis, where parts of the stomach or intestines protrude through the skin.

The research authors recommend that public health guidance should now be more explicit about the specific malformations associated with maternal smoking, in order to try and reduce the numbers of pregnant women who smoke."

______________________________________________________________________ 

RESULTS Significant positive associations with maternal smoking were found for: cardiovascular/heart defects [OR 1.09, 95% confidence interval (CI) 1.02–1.17]; musculoskeletal defects (OR 1.16, 95% CI 1.05–1.27); limb reduction defects (OR 1.26, 95% CI 1.15–1.39); missing/extra digits (OR 1.18, 95% CI 0.99–1.41); clubfoot (OR 1.28, 95% CI 1.10–1.47); craniosynostosis (OR 1.33, 95% CI 1.03–1.73); facial defects (OR 1.19, 95% CI 1.06–1.35); eye defects (OR 1.25, 95% CI 1.11–1.40); orofacial clefts (OR 1.28, 95% CI 1.20–1.36); gastrointestinal defects (OR 1.27, 95% CI 1.18–1.36); gastroschisis (OR 1.50, 95% CI 1.28–1.76); anal atresia (OR 1.20, 95% CI 1.06–1.36); hernia (OR 1.40, 95% CI 1.23–1.59); and undescended testes (OR 1.13, 95% CI 1.02–1.25). There was a reduced risk for hypospadias (OR 0.90, 95% CI 0.85–0.95) and skin defects (OR 0.82, 0.75–0.89). For all defects combined the OR was 1.01 (0.96–1.07), due to including defects with a reduced risk and those with no association (including chromosomal defects).

CONCLUSIONS Birth defects that are positively associated with maternal smoking should now be included in public health educational materials to encourage more women to quit before or during pregnancy. 

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Some  "conservatives" decry "activist" judges who take the law into their own hands. For example, here, Senator Orrin Hatch of Utah criticized activist judges.  And, the same conservatives often are fond of stating that the federal government exercises too much power, and that state law needs to be given far more respect. Here's Senator Hatch talking that talk.    So, what should these conservatives say when a Supreme Court Justice goes way out on a limb and acts alone to protect big tobacco against paying a state court judgment ?

The question arises because last fall, Justice Scalia took it on himself to issue - alone -    this opinion to  protect big tobacco against paying out money while it asked the Supreme Court to grant a discretionary appeal.  SCOTUS blog's story from last fall is here.   Now, the Court  has reversed Justice Scalia, as described online here, and pasted below.  Apparently the Justice's views are his own, and not the views of the Court. 

Enjoy Independence Day !

Full court reverses Scalia on tobacco case stay order

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The tobacco wars have moved another couple of  steps. A new AmLaw article by Susan Beck covers 1) a Florida appellate court affirming a $ 28 million plaintiff's verdict, and 2) a  $ 152 million verdict in Massachusetts in a lung cancer death case pushed by the Tobacco Litigation Project at Northeastern Law School. The AmLaw article includes various helpful links, including a link to a sister publication which televised the trial.

One wonders about future spinoff products from a televised trial.  Perhaps YouTube segments will follow ?  

One other thought to consider.  Should the Tobacco Litigation Project be considered a positive example of  "litigation funding" ?

As to the new verdict, here are key excerpts from Ms. Beck's article:

The Evans verdict appears to be largest  compensatory verdict ever in a individual smoking case. It's also notable because it occurred in Massachusetts, which, in contrast to Florida, is not exactly a hotbed of smoking litigation. In fact, according to plaintiffs lawyer Frisardi, this is the first tobacco plaintiffs verdict in Massachusetts and just the second smokers case to go to trial in the state. Frisardi stressed that this jury found that cigarettes were unreasonably defective. "That's an important milestone," he said.

Marie Evans, who died at age 54, claimed she was lured into a smoking habit when she was 13, after accepting free cigarettes handed out in the largely African American community of Roxbury. Under Massachusetts law, the plaintiffs were not allowed to ask for a specific amount of damages. The $71 compensatory award consists of $21 million for her son for the loss of companionship of his mother, and $50 million to Ms. Evans's estate for her pain and suffering.

Professor Philip Howard of Northeastern University School of Law, who worked on the plaintiffs legal team, told the Litigation Daily that this verdict is strategically important in the fight against the tobacco industry. "We brought this case in Massachusetts to establish additional fronts for tobacco to defend on," Howard told us. "This is an effort to light a fire in another region of the country." (Northeastern Law School is the home of the Tobacco Products Liability Project, which assists tobacco litigation around the country.)
 

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Update on November 1 post: 

Big tobacco's winning streak  came to an abrupt end. As explained below, outcomes vary for tort trials, and repetitive claims tend to "mature" over a period of years and trials. New science, however, also will change the maturation process.  Accordingly, it  is not wise to declare or presume victory is at hand after a few wins.

As described in this Law.com article by David Bario, the end of the defense string arrived with a plaintiff's verdict for  $ 80 million, which includes a punitive damages component at less than the  much-argued 10:1 ratio.   According to the article:

"Before the recent defense hegemony, plaintiffs lawyers at Searcy Denney Scarola Barnhart & Shipley had taken three Engle progeny cases to trial and won them all, including the last plaintiffs verdict before Big Tobacco began winning. Earlier this month, David Sales and James Gustafson went to trial with the firm's fourth Engle case. And on Monday, state court jurors in Bronson, Fla., delivered their client a verdict that breaks the defense winning streak in a big way.

The jury hit R.J. Reynolds with $72 million in punitive damages and $8 million in compensatory damages, finding that the tobacco company was 90 percent responsible for the death of James Horner, who died of lung cancer after smoking for 60 years. Here's the amended complaint Searcy Denney filed on behalf of Horner's daughter, Diane Webb; and here are the verdict forms the jury returned on compensatory and punitive damages."
 

November 1 Post

In mass tort litigation involving repeated trials of similar issues, the outcomes can go back and forth as the parties shift strategies and tactics. Thus, Law.com reports that the cigarette companies recently have won six straight Engle trials in Florida. Plaintiff's counsel say they will keep trying cases, and estimate that the defendants are spending   $ 5 million per trial.  The defense string no doubt is encouraging for the defendants. 

But, the defense win streak follows an even larger number of wins for plaintiffs at the start of the series of trials, as described here. Defendants also lost their 11th Circuit effort to avoid the series of trials. So, now it's up to plaintiffs to look afresh at their tactics and see if the trial approach needs freshening or improvement.

Perhaps the David Bernick factor is now at work in the Engle trials. In any event, the Engle trials are just one part of part of global tobacco litigation, as described here and here. And then there are media efforts too.

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Last week brought new insights into the global tobacco wars.  The insights are contained in information from four sources:

1)      the US Food and Drug Administration’s proposed new visual warnings for cigarette packages (click here to go to zipped package of the pictures)

2)      Duff Wilson’s Sunday front page NYT article detailing tobacco regulation litigation around the globe;  

3)       this Foley Hoag media piece regarding Uruguay retaining the law firm to defend it in a lawsuit filed by tobacco industry members; and

4)      this international treaty aimed at reducing the devastating human and financial tolls inflicted by sales of the packaged carcinogens commonly referred to as cigarettes.   

According to Mr. Duff’s article, “Uruguay’s groundbreaking law mandates that health warnings cover 80 percent of cigarette packages. It also limits each brand, like Marlboro, to one package design, so that alternate designs don’t mislead smokers into believing the products inside are less harmful.”  According to Foley Hoag, the litigation against Uruguay  “was initiated by FTR Holdings SA, a Swiss conglomerate that owns fellow plaintiffs Philip Morris as well as Abal Hermanos SA, the second-largest Uruguayan tobacco company.”

The big picture? Big tobacco, aided by tobacco farmers, has created a vast network to execute its strategy. The strategy?  Four steps.  First, sell packaged carcinogens to the addicted, uninformed and ignorant of the world.  Second, maintain the ability to sell by seducing governments with tax revenues or bludgeoning governments with litigation when meaningful regulations are imposed. Third, hire really smart litigation lawyers and settle litigation with agreements which perpetuate the opportunity to sell cigarettes. Fourth, create a vast web of corporate entities structured and operated to limit the assets reachable by disease victims, with litigators keeping the companies free of massive losses; losing slowly and in small amounts is acceptable because the companies remain wildly profitable.

Fighting back are some national governments, but many are woefully too small to effectively argue with big tobacco. 1As detailed by Mr. Duff, 171 countries meet this week in Uruguay to try to counter big tobacco. As detailed in an NYT article linked below, “the conference beginning on Monday in Punta del Este, Uruguay, will try to add specific terms to a public health treaty known as the Framework Convention on Tobacco Control, which since 2003 has been ratified by 171 nations. It would eventually oblige its parties to impose tighter controls on tobacco ingredients, packaging and marketing, expand cessation programs and smoke-free spaces and raise taxes — proven tactics against smoking.” 

The stakes are enormous in both lives and dollars. Globally, millions die every year from tobacco. WHO foresees 8 million annual tobacco cancer deaths by 2030.  And, as described in this prior post, The American Cancer Society estimates that tobacco-caused cancer deaths impose annual direct and indirect global economic costs of between $1.5 and 2 trillion. Remember, that's an annual number. No doubt it’s also too low because most cancer victims are left to die with no real fight to save them because their countries lack the necessary medical infrastructure.

What is the US doing? Not enough. In the US, we face daily headlines regarding medical care costs bankrupting companies and governments. Accordingly, one would think the United States would do all it can to stamp out sales of the leading and obvious cause of rampant, expensive diseases.  But that’s not been the case. President Bush focused his eight years on escalating multiple wars, but never found the time or courage to escalate the war against cancer deaths and big tobacco.  “President George W. Bush signed the treaty in 2004 but did not send it to the Senate, where a two-thirds vote is needed for ratification. President Obama hopes to submit it to the Senate next year, a White House spokesman said on Thursday.”    (The betting window is open as to the votes of tobacco state senators, and some but not all of their Blue Dog brethren.) 

Additional specifics follow, beginning with big picture information provided by Mr. Duff’s article, and concluding with specifics on big tobacco’s – shameful - litigation against Uruguay.  

NYT Excerpts

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“They’re using litigation to threaten low- and middle-income countries,” says Dr. Douglas Bettcher, head of the W.H.O.’s Tobacco Free Initiative. Uruguay’s gross domestic profit is half the size of the company’s $66 billion in annual sales.”

But Philip Morris International, the separate company spun out of Altria in 2008 to expand the company’s presence in foreign markets, has been especially aggressive in fighting new restrictions overseas.

It has not only sued Uruguay, but also Brazil, arguing that images the government wants to put on cigarette packages do not accurately depict the health effects of smoking and “vilify” tobacco companies. The pictures depict more grotesque health effects than the smaller labels recommended in the United States, including one showing a fetus with the warning that smoking can cause spontaneous abortion.

In Ireland and Norway, Philip Morris subsidiaries are suing over prohibitions on store displays.

In Australia, where the government announced a plan that would require cigarettes to be in plain brown or white packaging to make them less attractive to buyers, a Philip Morris official directed an opposition media campaign during the federal elections last summer, according to documents obtained by an Australian television program, and later obtained by The New York Times.”

Foley Hoag Excerpts

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In a first-of-its-kind case focusing on areas of conflict between a nation’s tobacco control regulations and the treaty rights of a multinational corporation, the government of Uruguay has retained Foley Hoag LLP to represent it in an arbitration case brought by Philip Morris, at the International Centre for Settlement of Investment Disputes (ICSID).

The Foley Hoag team is led by international law specialists and Washington-based partners Paul Reichler and Ronald Goodman.

The current ICSID arbitration was initiated by FTR Holdings SA, a Swiss conglomerate that owns fellow plaintiffs Philip Morris as well as Abal Hermanos SA, the second-largest Uruguayan tobacco company. The cigarette manufacturers contend that Uruguay’s restrictions on sales and marketing of tobacco products, violate the bilateral investment treaty between Switzerland and Uruguay by harming the companies’ business operations and trademarked brands.

Uruguay enacted the measures as part of a broad effort to safeguard and enhance public health. In 2005 it became one of 170 countries to sign the World Health Organization’s Framework Convention on Tobacco Control, a global initiative to reduce or eliminate tobacco use. Soon after, the Uruguayan government introduced restrictions on cigarette marketing and packaging, including:

Limiting each brand of cigarette to a “single representation,” that is, forbidding multiple iterations of a brand such as “light,” “menthol,” etc.;

Requiring pictograms on tobacco packages to graphically illustrate the possible adverse health effects of sustained tobacco use;

Mandating that 80 percent of the surface area of cigarette packages be covered with health warnings to consumers.

Cigarettes sold in Uruguay include such well known Philip Morris brands as Marlboro and L&M, as well as locally made Casino and Premier brands. As a result of the regulations Philip Morris has ceased marketing Marlboro varieties called “Gold,” “Green (Fresh Mint),” and “Blue.” The claim alleges that the government’s actions violate both the 1988 Switzerland-Uruguay bilateral investment treaty and international law, by imposing unreasonable restrictions and subjecting FTR and its subsidiaries to unfair treatment.

Mr. Reichler believes the plaintiffs have targeted Uruguay as a test case. “Our view is that Philip Morris is hoping to use this case to deter not only Uruguay but other signatories to the WHO’s Framework Convention from taking effective measures to safeguard the public health against the known hazards of tobacco consumption,” he said.

“Sovereign states are normally given wide discretion in enacting legislation or promulgating regulations to protect and promote public health,” Mr. Reichler noted. “Indeed, that is one of the fundamental aspects of sovereignty. This is not a case of economic regulation, but of government action strictly in the name of public health.”

Mr. Goodman said, “Uruguay’s regulations are aimed at tobacco products which, it is scientifically proven, kill people or cause grave illnesses to those who smoke and to those around them. Because of the widespread illness, disease and mortality created by smoking, tobacco products impose tremendous burdens on a country’s public health system.   In many countries the state pays for or subsidizes the care and treatment of sick people. The financial burdens on states caused by smoking are enormous.”

“Philip Morris and its associated companies are challenging the right and discretion of Uruguay to make its own determination on how to protect public health – which in our view is a sovereign right that no private company can overrule,” Mr. Goodman added.

The Campaign for Tobacco-Free Kids, a U.S.-based research and advocacy organization funded by the Bloomberg Foundation, has agreed to help finance Uruguay’s defense.

The arbitral tribunal will be comprised of one arbitrator selected by each side and a third whom the parties agree on.

Philip Morris is represented by the Swiss firm Lalive

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Tobacco sales continue today thanks to "big tobacco" long ago obtaining federal law preemption against most product liability claims. The industry strategy was both brilliant and deadly. Then, when litigation risks were closing in from cost recovery lawsuits by the states, the tobacco settlement kept the industry moving ahead as it locked states into enjoying the tax revenue being used to fund state budgets.

So, industry won a couple of times, and therefore people keep smoking and dying. In that light, it's good to see some potential offset ahead from a California ballot initiative to raise tobacco taxes by $ 1 per pack, with proceeds to fund cancer research. The initiative’s website is here. 

The initiative was officially certified on August 24, 2010 by the California Secretary of State, as described here. The net result is that the initiative will be on the ballot for the 2012 national election.

The organizers of the initiative would love financial support for the battle ahead to get the initiative passed. Set out below are key excerpts from the Secretary of State’s website:

The Attorney General’s official title and summary of the initiative is as follows:

IMPOSES ADDITIONAL TAX ON CIGARETTES FOR CANCER RESEARCH. INITIATIVE STATUTE. Imposes additional five cent tax on each cigarette distributed ($1.00 per pack), and an equivalent tax increase on other tobacco products, to fund cancer research and other specified purposes. Requires tax revenues be deposited into a special fund to finance research and research facilities focused on detecting, preventing, treating, and curing cancer, heart disease, emphysema, and other tobacco-related diseases, and to finance prevention programs. Creates nine-member committee charged with administering the fund. Summary of estimate by Legislative Analyst and Director of Finance of fiscal impact on state and local government: Increase in new cigarette tax revenues of about $855 million annually by 2011-12, declining slightly annually thereafter, for various health research and tobacco-related programs. Increase of about $45 million annually to existing health, natural resources, and research programs funded by existing tobacco taxes. Increase in state and local sales taxes of about $32 million annually. (09-0097.)

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I'm setting aside James Hardie and Australia for a few days. News on Friday provides a great springboard for some comments in the same general area of what's new in mass tort resolution thinking, and some points related to corporate actions to cope with/avoid/limit the corporate damage from mass tort claims.
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How does big tobacco admit it  faces massive global tort warfare ahead ? By hiring David Bernick away from Kirkland & Ellis, as was announced Friday - see article at the bottom.

Why is hiring Mr. Bernick so telling ? Look at what he has done.  K &  E  teams headed up by Mr. Bernick have often (but not always) won some of the most  difficult battles in mass tort litigation, and have included various creative and massive efforts to buy time and/or survival for corporate defendants. For example, his team successfully defended Grace executives in a criminal trial involving asbestos regulations and "tremolite contamination" in mined products; that trial would have been easy to lose due to asbestos hysteria. The team also was winning the W. R. Grace asbestos bankruptcy trial by thoroughly discrediting the seamy side of asbestos claiming by the not sick, and so they capitalized by reaching a fantastic mid-trial settlement in the  bankruptcy. Bernick and others  also did a business-saving (albeit unconstitutional) deal  in chapter 11 to free Asea Brown (ABB ) from its Combustion Engineering asbestos liabilities, and obtained that result despite the stench from ABB's   $ 20 million payment to plaintiff's counsel.  Mr. Bernick and others also undertook an ill-fated but brilliant effort on behalf of car companies to use the Federal-Mogul bankruptcy to convene one massive  Daubert hearing in federal court regarding whether brake linings with asbestos actually cause cancers. Even though the latter effort did not succeed on the merits; it bought much needed time for car companies at a time when asbestos litigation was at one of its most frenzied points.

One cannot help but wonder the price. If Mr. Bernick can do for PM what he has done for other entities, the financial dividend for PM shareholders will be huge. Indeed, Mr. Bernick actually will add real value to the bottom line with actual creative thinking and hard work. That said, perpetuating smoking is anything but the work of angels.

What issues are out there to keep Mr. Bernick busy and challenged ? A recent example arises from the disastrous $294 million verdict entered last fall in one of the thousands of pending post-Engle tobacco cases that are being  set for trials in Florida.  If one took that verdict into bankruptcy court and handed it to the "liability estimators," they could generate a future liability range of numbers that probably would include numbers in the trillions of dollars. Those numbers also could be offered in bankruptcy court to support fraudulent conveyance claims involving various corporate moves by tobacco companies. Recall, for example, that Asarco was hit this past year with a $ 6 billion dollar bankruptcy court judgment based on fraudulent conveyance claims tied to corporate activities undertaken in anticipation of tort and environmental claims.

That said, the bankruptcy liability estimation process is not even close to scientific, as Mr. Bernick well knows. Indeed, the Grace bankruptcy included one of the strongest indictments issued to date regarding the lack science and due process in bankruptcy proceedings, That indictment is set out in the testimony of Professor Heckman,  a University of Chicago economist and Nobel prize winner, as described  in item 4 of this prior post.

Meanwhile, there is global cigarette litigation. In Nigeria, the tobacco companies are the subject of $ 45 billion government cost recovery claims, as described, for example, here and here. And, as noted on Saturday, there have even been tobacco claims in Japan, which are not noteworthy for any success but are note worthy for the statistics regarding the continuing smoking patterns in Asia.

Perhaps most significantly, the tobacco industry recently suffered a resounding loss as the Massachusetts Supreme Court endorsed in sweeping terms a medical monitoring class action case against tobacco companies. Due to Congressional hearings and the tobacco settlements, it's very plain that the cigarette manufacturing industry very closely follows science, and so its senior executives undoubtedly are aware of the indicators that their companies soon enough will face a wave of  expensive medical monitoring and therapy claims arising from new scientific discoveries. Soon enough, it will be routine to provide effective screening examinations to find cancers when they are still microscopic. Incredible new devices and techniques will be used to create innovative therapies that will be developed to "cure" or manage the tumors, all at some significant amount of expense. See generally the many papers of Professor Gary Marchant, most of which are collected on his law school's website at the page which is here. Those developments will make it practical for plaintiff's lawyers to bring claims on behalf of persons in developing countries for which the opportunity for expensive life-saving treatment will create enough economic value to incentivize litigating cases that will have significant emotional appeal to any judge or jury.


My bet? Mr. Bernick's will architect and oversee an effective defense across the broad range of pending cases, all while planning for future efforts to obtain absurdly favorable settlements that promote continuing tobacco use by sharing revenues with governments and lawyers, not to mention, litigation funders, to produce securitized cash flows. The settlement also produced ancillary litigation over access to information from state attorney's general on why and how they settled. Certainly Mr. Bernick is well suited by experience to lead PM through the issues ahead.

Mr. Bernick will have plenty of new challenges because more and more commentators are speaking out on the myriad problems with the handling of mass tort claims. Indeed, new commentators are emerging. Commentators include Prof. Erichson on "The Trouble With All or Nothing Settlements" and others who last year spoke on whether more mass tort claims need to be litigated instead of settled. Prof. Burch wrote a post this past Friday on Prof. Redish's new book arguing that many mass tort class action procedures are unconstitutional (an issue I've been litigating and arguing since the late 1980s.) She also links to a summary of contra papers by Prof. Issacharoff, who also is a paid partisan and advocate in asbestos litigation, including (among others) the THAN bankruptcy (click by the first screen and then you should land at the page for In re T H Agriculture & Nutrition, L.L.C., Case No. 08-14692 (REG). The THAN case is the asbestos bankruptcy that produced a declaration from an asbestos  plaintiff's lawyer regarding his understandings from chapter 11 plan negotiations regarding his firm's clients being paid an average of over 700k per claimant for future claims against the THAN trust.

Challenges also will arise due to commentary and new thoughts from overseas. Prof. Burch wrote this recent cogent post summarizing a new report from the UK on tort claiming. To tease you to go read more, here are two key excerpts from the post summary:

"Of additional import, the final report recommends that solicitors and barristers should be allowed to enter into contingency fee arrangements, which are currently prohibited. Before entering into such an arrangement, the report recommends that claimants receive independent advice. It also suggests capping the fees at 25%.



Finally, the report recommends making third-party funding available to personal injury claimants (including those involved in collective actions). It defines third party funding as "The funding of litigation by a party who has no pre-existing interest in the litigation, usually on the basis that (i) the funder will be paid out of the proceeds of any amounts recovered as a consequence of the litigation, often as a percentage of the recovery sum; and (ii) the funder is not entitled to payment should the claim fail." (Final Report at p. 17). Very interesting."

UK corporate and insurance company lawyers issued a January 19 report she links to; here's their bottom line:

"If Jackson LJ's recommendations are passed into law, it seems safe to predict that they will lead to an increase in the number of collective actions seeking damages for personal injury. In particular, group claims against the manufacturers of allegedly defective products, which are no longer routinely funded by legal aid as they were in the 1980s and 1990s, are likely to become more common. Claimants with an arguable claim of this type would generally be able to proceed under a contingency fee, CFA or third-party funding arrangement without the spectre of possibly having to pay, out of their own pockets, either their own lawyers' fees or the costs of their opponent.

Costs shifting would remain in place for most types of collective action, such as those involving claims for anti-competitive behaviour or consumers' claims for economic loss. In these cases, the loser-pays rule would remain a significant disincentive to claimants considering a group action and would protect defendants against frivolous or speculative lawsuits.

The big question now is whether these reforms will be implemented. Jackson LJ appears to hold the view that his recommendations, which he describes as "a coherent package of interlocking reforms", should not be viewed individually but as a comprehensive set of proposals. Some of these proposals could be introduced relatively easily by amendment to the Civil Procedure Rules, such as the introduction of a qualified one-way costs shifting regime, but for the most part primary legislation would be required in order to give effect to other recommendations, such as abolishing the recoverability of success fees from defendants. With the general election taking place this year, civil justice reform is unlikely to be high on the Government's agenda. The likely delay will provide a window of opportunity for those who have concerns about particular aspects of these recommendations to make them known before the reforms are finally implemented."


We surely are living in interesting times for mass tort claiming.
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Here is the article from the Chicago Tribune regarding Mr. Bernick; the text is pasted below.

Friday, January 22, 2010

Top litigator at Kirkland leaving for Philip Morris

David Bernick, a star litigator at Kirkland & Ellis, is leaving the firm to become general counsel at Phillip Morris International.

Bernick has been with Kirkland for 31 years and has been involved in nearly every type of complex litigation imaginable, from defending companies with asbestos liability to representing breast-implant manufacturers.

"I have spent my entire career at Kirkland & Ellis and I am proud to have contributed to the growth and success of one of the top law firms," said Bernick in a statement provided by the firm. "I will remain close to my many friends and colleagues at the firm, but I look forward to pursuing new challenges during the next phase of my career with Philip Morris International."

Kirkland's incoming chairman, Jeffrey Hammes, said: "David has been an integral part of our premier litigation practice, and his achievements during his 31 years at Kirkland are truly remarkable. We thank him for his varied and long-standing service to the Firm and we wish him success in his new role.

Bernick will join Philip Morris on March 1. As part of the move, he will relocate to Switzerland from New York.

Tip of the hat to Above the Law for breaking the news.

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An article is here regarding a tobacco suit in Japan http://www.washingtonpost.com/wp-dyn/content/article/2010/01/22/AR2010012203301.htmlfailing to garner any relief.

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One of the best books I read last year was Nudge by Profs. Thaler and Sunstein, so I try to follow their ongoing Nudge blog. A post this week includes links to some interesting wesbsite on "greenwashing," "and a picture of a priceless old tobacco ad. Ads of that sort matter in some law suits today because some young jurors today have no idea why people ever smoked.

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