Brown v. R.J. Reynolds Tobacco Co.

• Decision Date: 28 August 2008
• Docket Number: Case No. 3:07-cv-00761-J-25HTS.
• Citation: 576 F.Supp.2d 1328
• Parties: Bernice BROWN, et al., Plaintiffs, v. R.J. REYNOLDS TOBACCO CO., etc., et al., Defendants.
• Court: U.S. District Court — Middle District of Florida

576 F.Supp.2d 1328

Bernice BROWN, et al., Plaintiffs, v. R.J. REYNOLDS TOBACCO CO., etc., et al., Defendants.

Case No. 3:07-cv-00761-J-25HTS.

United States District Court, M.D. Florida, Jacksonville Division.

August 28, 2008.

COPYRIGHT MATERIAL OMITTED

Charlie Easa Farah, Jr., Farah & Farah, PA, Norwood Sherman Wilner, Stephanie J. Hartley, Wilner Block, PA, Jacksonville, FL, for Plaintiffs.

John Fachet Yarber, Stephanie E. Parker, Jones Day, Atlanta, GA, Joseph W. Prichard, Jr., Robert B. Parrish, Moseley, Prichard, Parrish, Knight & Jones, Dana G. Bradford, II, Smith, Gambrell & Russell, LLP, John Andrew Devault, III, Patrick P. Coll, Bedell, Dittmar, Devault, Pillans & Coxe, PA, Jacksonville, FL, James B. Murphy, Jr., Joshua R. Brown, Shook, Hardy & Bacon, LLP, Tampa, FL, Kenneth J. Reilly, Shook, Hardy & Bacon, LLP, Miami, FL, for Defendants.

ORDER

HARVEY E. SCHLESINGER, District Judge.

This matter arises out of a class action involving approximately 700,000 citizens and residents of Florida who suffered or are presently suffering from various illnesses they claim were caused by addiction to cigarettes. After fourteen years of litigation and several appeals, the Florida Supreme Court in Engle v. Liggett Group, Inc., 945 So.2d 1246 (Fla.2006) ("Engle III"), decertified the class, nevertheless pronouncing that certain generalized trial court findings must be given "res judicata" effect. Id. at 1269. After class decertification, thousands of individual claims were originally filed or removed to this Court. In their Complaints, Plaintiffs, relying on general factual findings made by the Engle jury and approved by the Florida Supreme Court, seek to estop Defendants from denying liability and general causation as to all former class members. (Am. Compl. ¶ 29.) Defendants now move pursuant to Federal Rule of Civil Procedure 16(c) to challenge Plaintiffs' proposed application of the Engle findings, arguing that such application would be in conflict with Florida law and with the dictates of due process as guaranteed by the Fourteenth Amendment. After reviewing the relevant background, the Court will consider these contentions in turn.

I. Background

In May of 1994, six individuals filed a class action complaint seeking damages for injuries allegedly caused by smoking cigarettes. All six claimed that despite warnings of the harmfulness of smoking, they had become addicted to cigarettes and as a result of years of smoking had developed serious medical problems including heart disease and cancer. The allegations were made against the major domestic cigarette companies and two industry organizations (collectively "Defendants").¹ On October 31, 1994, a Florida trial court certified the class defining the class as: "All United States citizens and residents, and their survivors, who have suffered, presently suffer or have died from diseases and medical conditions caused by their addiction to cigarettes that contain nicotine." Defendants filed an interlocutory appeal of the trial court's class certification order, and on January 31, 1996, the Florida District Court of Appeal for the Third District affirmed the trial court's order certifying the class, but reducing its scope to include only Florida citizens and residents (the "Engle class"). R.J. Reynolds Tobacco Co. v. Engle, 672 So.2d 39, 40-42 (Fla. 3d DCA 1996) ("Engle I").²

On February 4, 1998, the trial court issued its first trial plan dividing the trial proceedings into three phases. Phase I consisted of a year-long trial on issues of liability and entitlement to punitive damages for the class as a whole. At trial the jury was to consider common issues relating exclusively to Defendants' conduct and the general health effects of smoking. On July 7, 1999, at the conclusion of the Phase I trial, the jury entered a verdict for the Engle class on all counts. Specifically, the Phase I findings were as follows:

(1) that cigarettes caused many of the diseases suffered by members of the class³; (2) that nicotine is addictive; (3) that defendants placed cigarettes on the market that were defective and unreasonably dangerous; (4) that the defendants made false statements of material fact, either knowing the statement was false or misleading, or being without knowledge as to its truth or falsity, with the intention of misleading smokers; (4)(a) that defendants concealed or omitted material information not otherwise known or available knowing that the material was false or misleading or failed to disclose a material fact concerning the health effects or addictive nature of smoking cigarettes or both; (5) that all of the defendants agreed to misrepresent information relating to the health effects of cigarettes or the addictive nature of cigarettes with the intention that smokers and the public would rely on this information to their detriment; (5)(a) that the defendants agreed to conceal or omit information regarding the health effects of cigarettes or their addictive nature with the intention that smokers and the public would rely on this information to their detriment; (6) that all of the defendants sold or supplied cigarettes that were defective; (7) that all of the defendants sold or supplied cigarettes that at the time of the sale or supply did not conform to representations of fact made by the defendants; (8) that all of the defendants were negligent; (9) that all of the defendants engaged in extreme and outrageous conduct or with reckless disregard relating to cigarettes sold or supplied to Florida smokers with the intent to inflict severe emotional distress; and (10) that all of the defendants' conduct rose to a level that would permit an award of punitive damages.

(Def.'s Ex. 1); Engle III, 945 So.2d at 1257.

Phase II was divided into two subparts. Phase II-A was intended to resolve the issues of causation and damages as to three individual class members. Phase IB's purpose was to determine a lump sum punitive damages award for the entire class. In Phase II-A, the jury determined that the three class representatives⁴ were entitled to compensatory damages in varying amounts offset by their comparative fault. The total compensatory damages award was $12.7 million. In Phase II-B, the jury awarded $145 billion in punitive damages to the class. The trial court then ordered that Defendants immediately pay the $145 billion punitive damages award into the court registry for the benefit of the Engle class.

The trial court then planned to move forward with Phase III, in which new juries were to decide the individual liability and compensatory damages for each class member. Before the Phase III proceedings could commence, Defendants filed an appeal with the Florida District Court of Appeal challenging the Phase I and Phase II verdicts.

On May 21, 2003, the Third District Court of Appeal issued its opinion decertifying the class and reversing the compensatory and punitive damages awards. Liggett Group, Inc. v. Engle, 853 So.2d 434 (Fla. 3d DCA 2003) ("Engle II"). In decertifying the class, the court of appeal noted that every court considering the issue had concluded that certification of smokers' cases is unworkable and improper because each claim is individualized, thus failing to satisfy the "predominance" and "superiority" requirements found in federal and state law for class certification. Id. at 444-45. It found that the Engle class claims were no different.⁵ In addition, the court also found that individualized choice-of-law issues made the proceedings unmanageable as a class action. Id. at 447-48.

The court of appeal went on to reverse the trial court's award of punitive damages to the class because the award was made in the absence of findings of liability and compensatory damages, id. at 450, and on grounds that the award was excessive in violation of state and federal law. Id. at 456-57.⁶ The court also reversed because of Plaintiffs' counsel's brazenly "race-based appeals for nullification." Id. at 458. Indeed, the court of appeal pointed out that Plaintiffs' counsel engaged in a calculated scheme designed to incite the jury to disregard the law because the Defendants were tobacco companies. Id. at 459.⁷

The Engle class appealed and on December 21, 2006, the Florida Supreme Court partially affirmed, partially reversed, and remanded the court of appeal's ruling. Engle III, 945 So.2d at 1246. The court affirmed the court of appeal's decertification of the Engle class as to future proceedings and its reversal of the punitive damages award. However, the court reversed the court of appeal's ruling that the class was improperly certified at inception because doing so after a trial had taken place "does not accord with common sense and logic." Id. at 1267. The court also reinstated the Phase II-A verdicts in favor of two of the class representatives⁸ and reversed the court of appeal's finding that Plaintiffs' counsel's arguments warranted reversal of the verdicts under Florida law.

Finally, although accepting the premise that class action treatment of the Engle matter was not feasible because "individualized issues such as legal causation, comparative fault, and damages predominate," the Florida Supreme Court held that the "pragmatic solution"⁹ was to retain certain Phase I findings. Id. at 1269. Specifically, the court found it proper to retain the following findings: Questions 1 (general causation); 2 (addiction to cigarettes); 3 (strict liability); 4(a) (fraud by concealment); 5(a) (civil-conspiracy-concealment); 6 (breach of implied warranty); 7 (breach of express warranty); and 8 (negligence). Id. at 1255. The court struck the findings on fraud and misrepresentation (Question 4) and intentional infliction of emotional distress (Question 9), because they "involved highly individualized determinations." Id. at 1269. The court then declared that "[c]lass members can choose to initiate individual damages actions and the Phase I common core findings we...