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From Products Liability Law Daily, June 12, 2013

$81 Million Punitive Damages Award Against Cigarette Maker Vacated

By Pamela C. Maloney, J.D.

An $81 million punitive damages award against a cigarette maker in an action brought by a smoker’s estate was vacated by the Massachusetts Supreme Judicial Court, which upheld the jury’s compensatory damage awards after reducing them to $10 million for the smoker’s son and $25 million for her estate (Evans v. Lorillard Tobacco Co., June 11, 2013, Gants, R.). The court determined that the jury’s finding that the cigarette maker had breached the implied warranty of merchantability adequately supported the compensatory award, as reduced. However, errors made by the lower court relating to the smoker’s theories of negligent design and marketing and the breach of the cigarette maker’s voluntarily undertaken duty to the public’s health tainted the punitive damages award to such an extent that remand for a new trial on that issue was the prudent course, the court concluded.

Background. The smoker, Marie R. Evans, died at the age of 54 from small cell lung disease caused by smoking cigarettes. The jury found that the designer and manufacturer of Newport brand cigarettes, Lorillard Tobacco Company, caused the smoker’s wrongful death based on the following theories of liability: breach of the implied warranty of merchantability because of design defect and inadequate warning of Newport cigarettes' health hazards and addictive properties; negligence in the design, marketing, or distribution of Newport cigarettes; negligent distribution by giving free samples of Newport cigarettes to minors; and negligent performance of a duty Lorillard voluntarily undertook in 1954 to research the health hazards of smoking and disclose accurate information regarding the results of that research to the smoking public. Applying comparative fault, the jury apportioned 30 percent of the fault to the smoker. The jury also found that the cigarette maker was grossly negligent and acted in a manner that was malicious, willful, wanton, or reckless, and awarded punitive damages in the amount of $81 million.

Implied warranty of merchantability. The Massachusetts high court found that the smoker’s estate had submitted sufficient evidence on its breach of implied warranty of merchantability because of design defect for the jury to conclude that the combined effect of the nicotine and tar consumed by smokers of Newport cigarettes was a substantial factor in causing the smoker’s addition, lung cancer, and wrongful death. The jury also could have concluded that her injury would have been reduced or avoided had she smoked cigarettes with a nonaddictive level of nicotine and a reasonably safe level of carcinogenic tar. According to the court, an alternative design for the Newport cigarette was both available and feasible, and the cigarette maker could not escape liability for its defective product simply because an addicted smoker continued to use a product that sated her addiction rather than switch to a safer product that would not do so.

Warning defects. The cigarette maker had argued that the health risks from cigarettes were obvious to everyone before 1970 and, therefore, it had no duty to warn of an obvious risk. The evidence showed that the smoker was not aware of the health risks of smoking when she started to smoke in 1960 at the age of 13, and that in 1964, when she became aware of the publicity surrounding the Surgeon General's report, she did not appreciate the danger of smoking Newport cigarettes to the same extent as she would have with adequate warning. Furthermore, a reasonable jury could find that the risks of cigarette smoking were certainly not obvious before 1966, when the warning on cigarette packages ordered by Congress provided only that “cigarette smoking may be hazardous to your health,” and were still not obvious before 1970, when the warning was stiffened to declare that “the Surgeon General has determined that cigarette smoking is dangerous to your health.”

Thus, the court concluded that the jury was appropriately instructed as to both a design defect and a warning defect and that, even though the court did not know whether the jury found causation as to one or both defects, the evidence was sufficient to support the jury's finding on either theory.

Negligence. The jury also found that the cigarette maker was negligent in the design, marketing and/or distribution of Newport cigarettes, and in failing to warn the smoker of the health hazards and/or addictive properties of this brand of cigarettes at any time prior to 1970. In addition, the jury determined that the cigarette manufacturer negligently distributed the cigarettes by giving samples to minors, including the smoker. However, the state high court opined that the jury had been incorrectly instructed on the law regarding the claim of negligent design and that the judge failed to provide the jury with guidance as to the meaning of negligent marketing and any limitation as to its scope. Because the high court could not determine what marketing duty the jury found the cigarette maker to have breached, nor ascertain on which theory the jury relied in finding causation, the liability findings as to negligence and the cigarette maker’s liability for wrongful death were vacated.

Breach of a voluntarily assumed duty. The estate alleged, and the jury found, that by signing the so-called 1954 Frank Statement, the cigarette maker had voluntarily undertaken a duty to research the health hazards of smoking and to disclose accurate information regarding the results of that research to the general public. The court noted that numerous courts had considered whether cigarette manufacturers voluntarily assumed a legal duty by joining the Frank Statement and all had concluded that they did not. The court explained that the smoker’s argument asked the court to characterize the commitments made in the Frank Statement as an enforceable eternal promise to the public at large to research the health effects of smoking and provide full disclosure of its research findings for all time. The court said that a duty so broad in scope and duration could not arise from such a pledge. Thus, the jury’s finding of liability on this issue was reversed.

Punitive damages. Because the court vacated the jury’s finding on negligence and breach of a voluntarily undertaken duty, the court also had to vacate the jury’s finding that the cigarette maker was grossly negligent and that it had acted in a manner that was malicious, willful, wanton, or reckless.

The case number is: SJC-11179.

Attorneys: Michael D. Weisman (Davis, Malm & D'Agostine, P.C.) for Evans; Paul F. Ware Jr., Kevin P. Martin & Andrew J. McElaney Jr. (Goodwin Procter LLP) for Lorillard Tobacco Company

Companies: Lorillard Tobacco Company

MainStory: TopStory DesignManufacturingNews WarningsNews DamagesNews TobaccoNews MassachusettsNews

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