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From Products Liability Law Daily, April 27, 2015

$27 million award against Philip Morris goes up in smoke for lack of detrimental reliance

By John W. Scanlan, J.D.

A jury verdict of $6.25 million in compensatory damages and $20.76 million in punitive damages against Philip Morris on a smoker’s fraudulent concealment and conspiracy claims was vacated by the U.S. District Court for the Middle District of Florida, which conditionally granted the company’s motion for a new trial. Although the court agreed that Philip Morris and other tobacco companies had engaged in long-term deceptive misconduct, the evidence did not show that the smoker herself had detrimentally relied upon their conduct when starting and continuing to smoke (Berger v. Philip Morris USA, Inc., April 23, 2015, Carr, J.).

Background. Judith Berger began smoking in the 1950s at age 13 or 14 because her friends encouraged her to do so. By age 20, she was smoking a pack and half each day. She did not quit smoking until 1988, when she was taking care of her twin sister who was dying of COPD. By the 1990s, Berger developed COPD herself; at trial, her life expectancy was estimated at three to five years. Berger, a Florida resident, brought claims for strict liability, civil conspiracy to fraudulently conceal, fraudulent concealment, negligence and gross negligence, and breach of express and implied warranties against a number of tobacco companies, including Philip Morris USA, Inc., asserting that she was addicted to cigarettes due to their lies and omissions. The case went to trial, and a jury awarded her $6.25 million in compensatory damages (although it found her 40 percent at fault) and $20.76 million in punitive damages based upon her fraud and conspiracy claims. Philip Morris filed a renewed motion for judgment as a matter of law on those claims, or in the alternative moved for a new trial.

The court found that the evidence at trial persuasively showed that the tobacco companies had engaged in what the court called a “massive, multi-faceted, protracted, and effective disinformation campaign.” At issue was whether there was sufficient evidence to show that Berger had detrimentally relied upon the fraudulent conduct in which Philip Morris and other tobacco companies had engaged.

Detrimental reliance/standard. The smoker argued that a decision by the First District Court of Appeal in R.J. Reynolds Tobacco Co. v. Martin, 53 So. 3d 1060 (Fla. App. 2010) meant that a jury could infer a plaintiff’s reliance on pervasive advertising campaigns and on the false controversy tobacco companies created without any direct evidence of reliance by the plaintiff. Other Florida districts had incorporated Martin’s reasoning into their decisions, but the district court noted that Martin did not control its review because as a federal court, it was bound to apply the federal standard for sufficiency of evidence, even in diversity cases. Furthermore, it found that use of Martin may conflict with decisions of the Florida Supreme Court regarding the Engle-progeny trials. In Engle v. Liggett Group, Inc. (Engle III), the high court stated that “nonspecific findings in favor of the plaintiffs on . . . fraud and misrepresentation . . . are inadequate to allow a subsequent jury to consider individual questions of reliance and legal cause.” In light of the Florida high court’s decisions in Engle III and Philip Morris USA, Inc. v. Douglas, which discussed Engle III’s holding on individualized determination of reliance, the district court believed that the Florida Supreme Court would not follow Martin in the manner suggested by the smoker. The district court determined that Martin did not provide the proper standard for detrimental reliance for the present case, and that the smoker had to prove that Philip Morris’ misconduct helped cause her to begin smoking and to continue smoking.

Lack of reliance. The jury verdict on fraudulent concealment and conspiracy to fraudulently conceal was vacated because the court found it contrary to the great weight of the evidence. The smoker’s own testimony showed that she was aware of the representations made by the tobacco companies, but she testified that she never bought or chose a particular brand because of an advertisement and that she had never seen or heard from the 1950s through the 1990s a tobacco company representative discuss the health risks of smoking. She was unfamiliar with the “disinformation campaign” from the Tobacco Industry Research Committee, the Council for Tobacco Research, and the Tobacco Institute. At her sister’s suggestion, she had switched from unfiltered to filtered cigarettes because she thought they tasted better, she preferred their feel in her mouth, and the filters kept loose bits of tobacco out of her mouth; she did not switch because of any representations by the tobacco companies that filtered cigarettes were safer than unfiltered ones. According to the smoker’s uncontradicted testimony, she did not rely to her detriment on incomplete representations regarding the health effects and the addictive nature of smoking cigarettes. Adopting her position would require a jury to draw a string of inferences that were in contradiction to her direct testimony.

The smoker testified that when she read in 1966 that the Surgeon General intended to place warnings on cigarette packages, her reaction at the time was that the warnings were speculative and that she was not 100 percent certain that smoking cigarettes was hazardous to her health. According to the court, this portion of her testimony could give rise to an inference that the tobacco companies’ disinformation campaign had affected her smoking-related decisions, but this inference was insufficient to support the verdict in light of the rest of her testimony. “Advertising did not influence her decision to smoke and then inhale: peer pressure did,” the court determined.

Only one of her expert witnesses focused on her smoking history, but most of that expert’s testimony regarding her behavior specifically was admitted solely for the purpose of evaluating the reliability of the expert’s conclusion and could not give rise to inferences of reliance.

The case is No. 3:09-cv-14157.

Attorneys: Charlie Easa Farah, Jr. (Farah & Farah, PA) for Judith Berger. Bonnie C. Daboll (Shook, Hardy & Bacon, LLP), Dana G. Bradford, II (Smith, Gambrell & Russell, LLP), and Joshua Reuben Brown (Greenberg Traurig, LLP) for Philip Morris USA, Inc., and Liggett Group, LLC.

Companies: Philip Morris USA, Inc.; Liggett Group, LLC; R.J. Reynolds Tobacco Co.

MainStory: TopStory DamagesNews TobaccoProductsNews FloridaNews

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