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From Products Liability Law Daily, May 6, 2016

Federal preemption no defense to smoker’s design defect claims

By Pamela C. Maloney, J.D.

The Federal Cigarette Labeling and Advertising Act did not impliedly preempt a smoker’s negligence and strict liability design defect claims, a federal district court in Florida ruled, denying a tobacco company’s renewed motion for summary judgment (Berger v. Philip Morris USA, Inc., May 5, 2016, Carr, J.).

In this Engle-progeny case, a smoker who suffers from advanced chronic obstructive pulmonary disorder (“COPD”), alleged that PM USA was liable to her under theories of negligence, strict liability, fraudulent concealment, and conspiracy to conceal. Following a trial, the jury returned a verdict for the smoker on each of these four claims, and awarded compensatory damages in the amount of $6.25 million (with a 40 percent comparative fault finding). The jury later awarded $20,760,000.14 in punitive damages based on the smoker’s fraudulent concealment and conspiracy-to-conceal claims [see Products Liability Law Daily’s September 19, 2014 analysis]. Following the verdict, the court granted PM USA judgment as a matter of law with respect to the fraudulent concealment and conspiracy-to-conceal claims, finding that the evidence failed to establish that the smoker had relied on PM USA’s concealments and misrepresentations about the hazards of cigarette-smoking. In the same order, the court vacated the $20.7 million punitive damages award [see Products Liability Law Daily’s April 27, 2015 analysisreconsideration denied]. The court refused to grant the smoker’s motion for reconsideration.

PM USA renewed its motion for judgment as a matter of law, arguing primarily that the Federal Cigarette Labeling and Advertising Act (the Labeling Act) impliedly preempted the smoker’s negligence and strict liability claims.

Conflict preemption. In support of its preemption defense, PM USA invoked a form of conflict preemption known as “obstacle preemption,” arguing that the smoker sought to impose liability on the inherent dangers of cigarettes. The court interpreted PM USA’s argument to mean that “the Engle Phase I findings were premised on the theory that all cigarettes are inherently defective and that every cigarette sale is an inherently negligent act.” The court found this characterization of the Engle findings hard to reconcile with the allegations, evidence, jury instructions, and the structure and content of the Phase I trial. According to the court, the Phase I negligence findings were limited to a determination that the named cigarette manufacturers failed to exercise the degree of care expected of a reasonable cigarette manufacturer. The jury’s findings were not that all cigarette manufacturers necessarily, and without due regard for the safety of their products, were or always would be negligent per se. Likewise, the jury’s Phase I strict liability findings were that each of the named cigarette manufacturer’s products were defective, not that all cigarettes were inherently defective. Thus, the court rejected PM USA’s characterization of the Phase I liability findings as being based on the inherent properties of cigarettes. The court added that even had the jury based its findings on the inherent characteristics of cigarettes, its verdict did not function as a “ban” on cigarette sales so as to give rise to conflict preemption.

Implied preemption. The court also held that even if the Engle products liability verdicts amounted to a judgment that all cigarettes are defective and that selling cigarettes is an inherently negligent act, the Labeling Act did not preempt the state of Florida from enforcing this type of functional ban. Although Congress has known that nicotine is addictive and that cigarette smoke contains carcinogens, it has not established an outright ban or prohibition on cigarettes. Instead, Congress developed a regulatory scheme that focuses on setting up a comprehensive federal program to deal with cigarette advertising, labeling, and sales. As part of this regulatory scheme, federal law expressly preempts any state with respect to the advertising and promotion of cigarettes that were packaged and labeled in conformity with the provisions of the Labeling Act. However, it did not preempt other common law claims beyond the scope of the preemption clause, such as defective design claims.

The court went on to consider whether a common-law ban on cigarette sales presented an obstacle to Congress’s objectives in regulating cigarettes. The court explained that generally, if a state law requirement fell within the scope of an anti-preemption clause, it could not stand as an obstacle to Congressional objectives because Congress already had determined that such a state law was acceptable. Considering PM USA’s preemption argument in light of this general rule, the court concluded that the company’s argument ignores the fact that each time Congress has regulated certain aspects of the tobacco industry, it has expressly preserved broad state authority to regulate—or even to ban outright—the sale, distribution, possession or use of cigarettes.

Moreover, Congress expressly stated that it did not intend to “affect any action or the liability of any person under the product liability of any State.” The court stated that this language indicates that Congress did not intend to impair either preexisting tort actions or prospective product liability claims. Therefore, even assuming that Engle product liability verdicts effectively banned all cigarette sales, Congress has expressed its willingness to tolerate both prohibitions and product liability suits alike. The court concluded that state-law prohibition on cigarette sales could stand side-by-side with the fact that Congress has tolerated cigarettes and purposefully has refrained from banning them.

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) and Dana G. Bradford, II (Smith, Gambrell & Russell, LLP) for Philip Morris USA, Inc. and Liggett Group, LLC.

Companies: Philip Morris USA, Inc.; Liggett Group, LLC

MainStory: TopStory PreemptionNews EvidentiaryNews DamagesNews TobaccoProductsNews FloridaNews

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