Brown & Williamson Tobacco Corp. v. Jacobson, 82 C 1648.

• Decision Date: 07 August 1986
• Docket Number: No. 82 C 1648.,82 C 1648.
• Court: U.S. District Court — Northern District of Illinois
• Parties: BROWN & WILLIAMSON TOBACCO CORPORATION, Plaintiff, v. Walter JACOBSON and CBS, Inc., Defendants.

644 F. Supp. 1240

BROWN & WILLIAMSON TOBACCO CORPORATION, Plaintiff, v. Walter JACOBSON and CBS, Inc., Defendants.

No. 82 C 1648.

United States District Court, N.D. Illinois, E.D.

August 7, 1986.

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Martin London, Lewis R. Clayton, Paul, Weiss, Rifkind, Wharton & Garrison, New York City, Max E. Wildman, David L. Schiavone, Wildman, Harrold, Allen & Dixon, Chicago, Ill., for plaintiff.

Thomas H. Morsch, Richard J. O'Brien, Sidley & Austin, James A. Klenk, Reuben & Proctor, Chicago, Ill., for defendants.

MEMORANDUM OPINION AND ORDER

WILLIAM T. HART, District Judge.

Defendants Walter Jacobson and CBS, Inc. move to vacate the judgment entered against them and to enter judgment in their favor notwithstanding the verdicts or, in the alternative, for a substantial remittitur of damages or a new trial.

The complaint upon which this case was tried was initially dismissed. On appeal it was upheld and the case was remanded for trial. Brown & Williamson Tobacco Corp. v. Jacobson, 713 F.2d 262 (7th Cir. 1983). The Court of Appeals held that a television broadcast stating that advertising designed to attract children to smoke by associating smoking with pleasurable illicit activity — pot, wine, beer and sex — was libelous per se because it accused plaintiff Brown & Williamson Tobacco Co. ("B & W") of immoral conduct.

The Court of Appeals accurately described the nature of this case (as shown by the evidence at trial) as follows:

In 1975, Ted Bates, the advertising agency that had the Viceroy account, hired the Kennan market-research firm to help develop a new advertising strategy for Viceroy. Kennan submitted a report which stated that for "the younger smoker," "a cigarette, and the whole smoking process, is part of the illicit pleasure category.... In the young smoker's mind a cigarette falls into the same category with wine, beer, shaving, wearing a bra (or purposely not wearing one), declaration of independence and striving for self-identity. For the young starter, a cigarette is associated with introduction to sex life, with courtship, with smoking `pot' and keeping studying hours...." The report recommended, therefore, the following pitches to "young smokers, starters": "Present the cigarette as part of the illicit pleasure category of products and activities.... To the best of your ability, (considering some legal constraints), relate the cigarette to `pot', wine, beer, sex, etc. Don't communicate health or health-related points." Ted Bates forwarded the report to Brown & Williamson. ... Brown & Williamson rejected the "illicit pleasure strategy" proposed in the report, and fired Ted Bates primarily because of displeasure with the proposed strategy.

Years later the Federal Trade Commission conducted an investigation of cigarette advertising, and in May 1981 it published a report of its staff on the investigation. The FTC staff report discusses the Kennan report, correctly dates it to May 1975, and after quoting from it the passages we have quoted states that "B & W adopted many of the ideas contained in this report in the development of a Viceroy advertising campaign." In support of this assertion the staff report quotes an internal Brown & Williamson document on "Viceroy Strategy," dated 1976, which states, "The marketing efforts must cope with consumers' attitudes about smoking and health, either providing them a rationale for smoking a full flavor VICEROY or providing a means of repressing their concerns about smoking a full flavor VICEROY." The staff report then quotes a description of three advertising strategies. Although the description contains no reference to young smokers or to "starters," the staff report states: "B & W documents also show that it translated the advice presumably from the Kennan report on how to attract young `starters' into an advertising campaign featuring young adults in situations that the vast majority of young people probably would experience and in situations demonstrating adherence to a `free and easy, hedonistic lifestyle.'" The interior quotation is from another 1976 Brown & Williamson document on advertising strategy.

On November 4, 1981, a reporter for WBBM-TV called Brown & Williamson headquarters and was put in touch with a Mr. Humber in the corporate affairs department. The reporter told Mr. Humber that he was preparing a story on the tobacco industry for Walter Jacobson's "Perspective" program and asked him about the part of the FTC staff report that dealt with the Viceroy advertising strategy. Humber replied that Brown & Williamson had rejected the proposals in the Kennan report and had fired Ted Bates in part because of dissatisfaction with those proposals.

Walter Jacobson's "Perspective" on the tobacco industry was broadcast on November 11 and rebroadcast on November 12 and again on March 5, 1982. In the broadcast, Jacobson, after stating that "pushing cigarettes on television is prohibited," announces his theme: "Television is off limits to cigarettes and so the business, the killer business has gone to the ad business in New York for help, to the slicksters on Madison Avenue with a billion dollars a year for bigger and better ways to sell cigarettes. Go for the youth of America, go get 'em guys.... Hook 'em while they are young, make 'em start now — just think how many cigarettes they'll be smoking when they grow up." Various examples of how cigarette marketing attempts "to addict the children to poison" are given. The last and longest concerns Viceroy.

The cigarette business insists, in fact, it will swear up and down in public, it is not selling cigarettes to children, that if children are smoking, which they are, more than ever before, it's not the fault of the cigarette business. That's what Viceroy is saying, "Who knows whose fault it is that children are smoking? It's not ours."

Well, there is a confidential report on cigarette advertising in the files of the Federal Government right now, a Viceroy advertising, the Viceroy strategy for attracting young people, starters they are called, to smoking — "FOR THE YOUNG SMOKER.... A CIGARETTE FALLS INTO THE SAME CATEGORY WITH WINE, BEER, SHAVING OR WEARING A BRA...." says the Viceroy strategy — "A DECLARATION OF INDEPENDENCE AND STRIVING FOR SELF-IDENTITY." Therefore, an attempt should be made, says Viceroy, to " ... PRESENT THE CIGARETTE AS AN INITIATION INTO THE ADULT WORLD," to " ... PRESENT THE CIGARETTE AS AN ILLICIT PLEASURE ... A BASIC SYMBOL OF THE GROWING-UP, MATURING PROCESS." An attempt should be made, says the Viceroy slicksters, "TO RELATE THE CIGARETTE TO `POT', WINE, BEER, SEX. DO NOT COMMUNICATE HEALTH OR HEALTH-RELATED POINTS." That's the strategy of the cigarette slicksters, the cigarette business which is insisting in public, "We are not selling cigarettes to children."

They're not slicksters, they're liars.

Id. at 266.

The liability and damage issues were bifurcated with the same jury hearing the evidence on both liability and damages. Pursuant to Rule 49(a) of the Federal Rules of Civil Procedure, the jury made separate findings on the liability issues. The jury found that: (1) plaintiff proved by a preponderance of the evidence that defendants' broadcast was "of and concerning" B & W; (2) plaintiff proved by a preponderance of the evidence that defendants' broadcast was substantially false; (3) plaintiff proved by clear and convincing evidence that defendants knew the broadcast was false or recklessly disregarded whether or not the broadcast was false; and (4) defendants did not prove by a preponderance of the evidence that the broadcast was a "fair summary" of portions of a government report. After hearing evidence with respect to damages the jury awarded B & W $3 million in general damages, $2 million in punitive damages from CBS, and $50,000 in punitive damages from Jacobson.

Defendants contend that they are entitled to post-trial relief because the jury's findings and verdicts are against the manifest weight of the evidence; evidence offered by plaintiff was improperly received or evidence offered by defendants was improperly excluded; instructions tendered were improperly given or refused; defendants were precluded from asserting to the jury the defense of opinion; punitive damages are unconstitutional; and the amount of compensatory and punitive damages was excessive. Defendants request in the alternative that the court order a remittitur.

I. LIABILITY

Under Illinois law, which governs in this diversity case, judgment notwithstanding the verdict is granted "only in those cases in which all of the evidence, when viewed in its aspect most favorable to the opponent, so overwhelmingly favors movant that no contrary verdict based on the evidence could ever stand." Pedrick v. Peoria and Eastern Railroad, 37 Ill.2d 494, 510, 229 N.E.2d 504, 513-14 (1967); General Foam Fabricators, Inc. v. Tenneco Chemicals, Inc., 695 F.2d 281, 285-86 (7th Cir.1982). The standard of review for a new trial is also strict. The court may not second guess a jury or substitute its view for that of the jury. Robison v. Lescrenier, 721 F.2d 1101, 1104 (7th Cir.1983); Continental Air Lines, Inc. v. Wagner-Morehouse, Inc., 401 F.2d 23, 30 (7th Cir. 1968). All disputes concerning the reasonable inferences to be drawn from the evidence must be resolved against the moving party. The credibility of the witnesses is a matter for the jury and not for the court. Oberman v. Dun & Bradstreet, Inc., 507 F.2d 349, 353 (7th Cir.1974).

To assure that the judgment does not constitute a forbidden intrusion in the field of free expression, an independent examination of the record must be made to determine whether the jury's finding of actual malice is supported by clear and convincing evidence. Bose Corp. v. Consumers Union of United States, Inc., 466 U.S. 485, 104 S.Ct. 1949, 80 L.Ed.2d 502 (1984); Anderson v. Liberty Lobby, Inc., ___ U.S. ___, 106 S.Ct. 2505, 91 L.Ed.2d...