Bifolck v. Philip Morris USA Inc.

• Decision Date: 22 August 2019
• Docket Number: Docket No. 17-3927,August Term 2018
• Citation: 936 F.3d 74
• Parties: Vincent J. BIFOLCK, Individually and as Executor of the Estate of Jeanette D. Bifolck, Plaintiff-Appellant, v. PHILIP MORRIS USA INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Second Circuit

936 F.3d 74

Vincent J. BIFOLCK, Individually and as Executor of the Estate of Jeanette D. Bifolck, Plaintiff-Appellant,

v.PHILIP MORRIS USA INC., Defendant-Appellee.^*

Docket No. 17-3927

August Term 2018

United States Court of Appeals, Second Circuit.

Argued: January 31, 2019

Decided: August 22, 2019

DAVID S. GOLUB (Jonathan M. Levine, on the brief), Silver Golub & Teitell LLP, Stamford, CT, for Plaintiff-Appellant.

GEOFFREY J. MICHAEL, Arnold & Porter Kaye Scholer LLP, Washington, D.C. (David E. Kouba, Arnold & Porter Kaye Scholer LLP, Washington, DC; Paul W. Rodney, Arnold & Porter Kaye Scholer LLP, Denver, CO; Frank P. Kelly, Shook, Hardy & Bacon LLP, San Francisco, CA; Scott D. Kaiser, Ruth Anne French-Hodson, Shook, Hardy & Bacon LLP, Kansas City, MO; Francis H. Morrison, III, Axinn Veltrop & Harkrider LLP, Hartford, CT, on the brief), for Defendant-Appellee.

Before: CALABRESI, CABRANES, AND WESLEY, Circuit Judges.

WESLEY, Circuit Judge:

Vincent Bifolck, individually and as executor of the estate of his deceased wife Jeanette Bifolck, appeals from a judgment of the United States District Court for the District of Connecticut (Underhill, J. ) entered at the conclusion of a jury trial. Bifolck sued Philip Morris USA Inc. under the Connecticut Product Liability Act ("CPLA"), alleging that its Marlboro and Marlboro Lights cigarettes (collectively, "Marlboros") were negligently designed and caused his wife’s lung cancer

and subsequent death at the age of 42.

Before trial, Bifolck moved to apply nonmutual offensive collateral estoppel¹ to certain factual findings made in a civil Racketeer Influenced and Corrupt Organizations Act ("RICO") case against Philip Morris and other major cigarette manufacturers before the United States District Court for the District of Columbia. See United States v. Philip Morris USA, Inc. ("DOJ "), 449 F. Supp. 2d 1 (D.D.C. 2006). Bifolck sought to preclude six factual findings, including that Philip Morris "manipulated [its] cigarette design and composition to assure nicotine delivery levels which create and sustain addiction." Bifolck App. 252. The district court denied the motion, concluding that the issues to which Bifolck sought to give preclusive effect were not necessary to the judgment in DOJ , and that the issues in the two actions were not sufficiently identical. After a two-week trial, a jury found that Bifolck had failed to establish his claim.

On appeal, Bifolck argues that the district court erroneously applied the standard for nonmutual offensive collateral estoppel. We agree. But, in the circumstances presented here, the district court’s error does not necessarily require vacatur of the judgment. Accordingly, we remand the case and direct the district court to consider whether the application of nonmutual offensive collateral estoppel would be unfair—a question that it expressly declined to reach. The judgment stands pending the outcome of these proceedings and, if requested by the parties, any further appellate review.

BACKGROUND

Jeanette Bifolck began smoking Marlboros in the early 1970s and stopped shortly before her death from lung cancer

in 2000. In 2006, Vincent Bifolck filed this lawsuit, alleging that the "toxic ingredients" in Marlboros caused his wife’s cancer and death. Bifolck App. 78. Relying on the CPLA, Conn. Gen. Stat. §§ 52-572m et seq ., Bifolck sought compensatory and punitive damages, arguing that Philip Morris "had the ability to design and manufacture" its cigarettes with reduced levels of nicotine and carcinogens, but negligently and "purposefully designed and sold its cigarette products to deliver a pharmacologically effective dose of nicotine in order to create and sustain nicotine addiction in its consumer smokers." Id. at 79–80. He also alleged that Philip Morris "falsely den[ied] that it manipulated the nicotine in [Marlboros]." Id. at 82. This, Bifolck argued, made Marlboros "defective and unreasonably dangerous" under the CPLA. Id. at 83.

Three weeks before trial, Bifolck moved to give preclusive effect to certain findings made in DOJ . That case began many years before, when the U.S. Department of Justice brought a civil RICO action against several major cigarette manufacturers, including Philip Morris. DOJ , 449 F. Supp. 2d at 26. In August 2006, after a nine-month bench trial, the district court found that the defendants, including Philip Morris, violated RICO. Id. at 851, 901. As part of the remedy, the court ordered Philip Morris to make several "corrective statements"² to major media outlets, including that³ :

Philip Morris USA intentionally designed cigarettes to make them more addictive. Cigarette companies control the impact and delivery of nicotine in many ways, including designing filters and selecting cigarette paper to maximize the ingestion of nicotine, adding ammonia to make the cigarette taste less harsh, and controlling the physical and chemical make-up of the tobacco blend.

United States v. Philip Morris USA Inc. , 257 F. Supp. 3d 1, 5 (D.D.C. 2017).

After the corrective statements had been finalized but before they were published, Bifolck moved to preclude Philip Morris from challenging at trial six factual findings made against Philip Morris in DOJ . As relevant here, he sought to preclude Philip Morris from challenging that "[b]oth before and during the time that Mrs. Bifolck smoked, Philip Morris manipulated cigarette design and composition to assure nicotine delivery levels which create and sustain addiction." Bifolck App. 252.

The district court denied Bifolck’s motion. It concluded, first, that the issues to which he sought to give preclusive effect were not identical to the issues in this action. In its view, DOJ , a "massive," multi-defendant civil RICO case, differed materially from Bifolck’s single-defendant, state product liability case. Id. at 605. The district court also determined that none of the findings to which Bifolck "[sought] to give preclusive effect ... [were] necessary to the [c]ourt’s ruling in [ DOJ ]." Id. It reasoned that the thousands of findings in DOJ made it "literally impossible" to determine which finding(s), if any, were necessary to the court’s judgment. Id. Finally, the court noted that if it "had to reach" the issue, it "probably would find that there are equitable considerations ... that would make it inappropriate" to apply nonmutual offensive collateral estoppel. Id.

Trial commenced. Bifolck argued that, during the relevant period, Philip Morris’s Marlboros were defective because they were unnecessarily carcinogenic and unnecessarily addictive. Philip Morris presented evidence that it did not manipulate nicotine yields in Marlboros to achieve an addictive level of nicotine. Richard Jupe, an employee of a Philip Morris affiliate whom Philip Morris called to provide expert testimony concerning cigarette design, testing, and manufacturing, testified that Philip Morris "[n]ever added nicotine" to its cigarettes between 1970 and 2000, and that the only nicotine in Marlboros was "naturally occurring in the leaf." Id. at 670. Jupe further testified that Philip Morris never studied the "minimum effective dose" necessary to create and sustain an addiction. Id. at 679. The court instructed the jury that it could find the design of Marlboros defective if it found "that the cigarettes were unreasonably dangerous because they were unnecessarily addictive ... [or] unnecessarily carcinogenic." Id. at 681. The jury found that Bifolck failed to establish his claim.

On appeal, Bifolck challenges the district court’s pretrial ruling with respect to one finding to which he sought to give preclusive effect: that Philip Morris "deceiv[ed] consumers into becoming or staying addicted to cigarettes by manipulating the design of cigarettes and the delivery of nicotine to smokers, while at the same time denying that they engaged in such efforts."⁴ DOJ , 449 F. Supp. 2d at 852.

DISCUSSION

Nonmutual offensive collateral estoppel, a form of issue preclusion, "preclude[s] a defendant from relitigating an issue the defendant has previously litigated and lost to another plaintiff." Faulkner , 409 F.3d at 37 (citing Parklane Hosiery Co. v. Shore , 439 U.S. 322, 329, 99 S.Ct. 645, 58 L.Ed.2d 552 (1979) ). To invoke this doctrine, a plaintiff must satisfy four conditions:

(1) the issues in both proceedings must be identical,

(2) the issue in the prior proceeding must have been actually litigated and actually decided, (3) there must have been a full and fair opportunity for litigation in the prior proceeding, and

(4) the issue previously litigated must have been necessary to support a valid and final judgment on the merits.

Id. (quotation marks and citation omitted). Additionally, in order to blunt the fear that nonmutual offensive collateral estoppel may be unfair to a defendant or fail to promote judicial economy, district courts must ensure that application of the doctrine is not unfair. See Parklane Hosiery , 439 U.S. at 331, 99 S.Ct. 645 ("[W]here ... the application of offensive estoppel would be unfair to a defendant, a trial judge should not allow [it].").

A. Standard of Review

There has been some confusion about the proper standard to be used in reviewing a district court’s nonmutual offensive collateral estoppel determination. This Court has previously suggested that it reviews the issue de novo . See SEC v. Monarch Funding Corp. , 192 F.3d 295, 303 (2d Cir. 1999). But, relying on the Supreme Court’s guidance in Parklane Hosiery , we have also been careful to note that a "district court is generally accorded wide discretion to determine when offensive collateral estoppel should be applied." See Remington Rand Corp. v. Amsterdam-Rotterdam Bank, N.V. , 68 F.3d 1478, 1486 (2d Cir. 1995) (citing Parklane Hosiery , 439 U.S. at 331, 99 S.Ct. 645 ).

Monarch Funding and Remington Rand focused on the correct standard for a particular aspect of collateral estoppel but failed to articulate how the standards operate together. Othe...