Blue Cross & Blue Shield of N.J. v. Philip Morris, 98 CV 3287(JBW).
| Court | United States District Courts. 2nd Circuit. United States District Court (Eastern District of New York) |
| Citation | 178 F.Supp.2d 198 |
| Docket Number | No. 98 CV 3287(JBW).,98 CV 3287(JBW). |
| Parties | BLUE CROSS AND BLUE SHIELD OF NEW JERSEY, INC., et al., Plaintiffs, v. PHILIP MORRIS, INCORPORATED, R.J. Reynolds Tobacco Company, Brown & Williamson Tobacco Corporation, Liggett Group, Inc., Lorillard Tobacco Company, British American Tobacco, Ltd. Defendants. |
| Decision Date | 19 October 2001 |
v.
PHILIP MORRIS, INCORPORATED, R.J. Reynolds Tobacco Company, Brown & Williamson Tobacco Corporation, Liggett Group, Inc., Lorillard Tobacco Company, British American Tobacco, Ltd. Defendants.
Page 199
COPYRIGHT MATERIAL OMITTED
Page 200
COPYRIGHT MATERIAL OMITTED
Page 201
COPYRIGHT MATERIAL OMITTED
Page 202
COPYRIGHT MATERIAL OMITTED
Page 203
Dewey Ballantine LLP, New York, NY, By Paul J. Bschorr, Esq., Vincent R. Fitz-Patrick, Jr., Esq., Michael Hefter, Esq., Heather K. McDevitt, Esq., Dewey Ballantine LLP, Washington, DC, By Martha J. Talley, Esq., for Plaintiffs Blue Cross, et al.
Arnold & Porter, Washington, DC, By Murray R. Garnick, Esq., Sedgwick, Detert, Moran & Arnold, San Francisco, CA, By Kevin J. Dunne, Esq., Sedgwick, Detert, Moran & Arnold, New York, By James T. Conlon, Esq., for Defendant Philip Morris, Incorporated.
Sedgwick, Detert, Moran & Arnold, New York, By David M. Covey, Esq., Kirkland & Ellis, Washington, DC, By Kenneth N. Bass, Esq., for Defendant Brown & Williamson Tobacco Corporation.
Greenberg Traurig, LLP, New York, By Alan Mansfield, Esq., Shook, Hardy & Bacon, LLP, Kansas City, MO, By Gary R. Long, Esq., for Defendants Lorillard Tobacco Company, Lorillard, Inc.
Debevoise & Plimpton, New York, By Steven Klugman, Esq., for Defendant Council for Tobacco Research, U.S.A., Inc.
Jacob, Medinger & Finnegan, LLP, New York, By Barry S. Schaevitz, Esq., for Defendant Smokeless Tobacco Council, Inc.
Womble, Carlyle, Sandridge, & Rice, PLLC, Atlanta, GA, By R. Dal Burton, Esq., Womble, Carlyle, Sandridge, & Rice, PLLC, Winston-Salem, North Carolina, By Thomas D. Schroeder, Esq., Ursula M. Henninger, Esq., Collier, Shannon, Rill, & Scott, PLLC., Washington D.C., By John B. Williams, Esq., for Defendants R.J. Reynolds Tobacco Co., and RJR Nabisco, Inc.
Chadbourne & Parke LLP, New York, By Thomas J. McCormack, Esq., for Defendant British American Tobacco (Investments) Limited (formerly known as British-American Tobacco Company Limited).
Simpson Thacher & Bartlett, New York, By Joseph McLaughlin, Esq., for Defendant BAT Industries P.L.C.
Davis & Gilbert, LLP, New York, By Bruce M. Ginsberg, Esq., for Defendant Hill & Knowlton, Inc.
Kasowitz, Benson, Torres & Friedman LLP, New York, By Leonard Feiwus, Esq., for Defendants Liggett Group Inc., Liggett & Myers, Inc., and Brooke Group Ltd.
Page 204
Seward & Kissel, New York, By Anthony R. Mansfield, Esq., for Defendant The Tobacco Institute, Inc.
WEINSTEIN, Senior District Judge.
Table Of Contents
I. Introduction ....................................................................... 206
II. The Jury ........................................................................... 208
III. Rule 50(b) Motion to Set Aside the Verdict ......................................... 209
IV. Evidence ........................................................................... 210
A. Evidence of Medical Causation ................................................... 210
1. Smoking causes cancer and other disease ...................................... 210
2. Smoking aggravates medical costs ............................................. 214
B. Evidence of Deceptive Practices ................................................. 214
1. Defendants denied causation despite contrary evidence in internal
documents ................................................................... 215
a. Public statements from the 1950s to the present ........................... 216
b. Knowledge from the 1950s to the present ................................... 219
2. Defendants funded scientific studies to discredit scholarship
demonstrating causation ..................................................... 221
3. Defendants suppressed the development of new safer products to
intercept quitters and to dispel appearance that their products
were unsafe ................................................................. 222
4. Defendants covered-up ........................................................ 224
C. Evidence that Deceptive Practices Caused Consumers and Plaintiff
Damages ........................................................................ 224
1. Evidence that defendants knew the public would act upon
deceptive practices .......................................................... 225
2. Evidence that defendants' misrepresentations caused consumers
and plaintiff damages ........................................................ 225
a. Expert testimony .......................................................... 226
i. Dr. Jon Krosnick ..................................................... 226
ii. Dr. Jeffery Harris and others ........................................ 227
b. Videotaped depositions .................................................... 228
c. Surveys, medical and psychological literature, and other
documents ................................................................ 230
Page 205
V. Remoteness Under New York's Consumer Protection Act ................................ 230
A. Language ........................................................................ 230
B. Legislative Design and History of New York General Business Law
Section 349 .................................................................... 231
C. General History of Consumer Protection Statutes ................................. 237
1. Modern consumer protection acts .............................................. 239
2. State consumer statutes permitting indirect injuries ......................... 240
D. Application ..................................................................... 242
1. "Remoteness" does not bar plaintiff's claims under section 349 ............... 243
2. Plaintiff has standing to sue under section 349 .............................. 245
VI. Subrogation Under Section 349 ...................................................... 245
VII. Individualized Proof of Causation and Damages ...................................... 247
A. Federal Rules of Civil Procedure and Evidence ................................... 249
B. Appropriateness of Sampling and Survey Techniques ............................... 250
1. Due process .................................................................. 253
2. Seventh amendment jury trial rights .......................................... 255
3. Erie ......................................................................... 259
VIII. Preemption ......................................................................... 262
A. Preemption Under Federal Law .................................................... 262
B. State Regulatory Compliance Defense ............................................. 265
IX. Evidence Sufficient to Support Low Tar Fraud ....................................... 266
A. Evidence Admissible to Support General Deception ................................ 267
B. Evidence Admissible to Support Damages .......................................... 268
X. Evidence of Post-1980 Deceptive Acts and Practices ................................. 268
A. Law ............................................................................. 268
B. Application ..................................................................... 269
XI. Statute of Limitations ............................................................. 271
A. Law ............................................................................. 271
B. Application ..................................................................... 273
XII. Sufficiency of Damages ............................................................. 273
Page 206
A. Law ............................................................................... 274
B. Application ....................................................................... 274
XIII. Conclusion ...........................................................................275
I. Introduction
This is one of the many suits designed to make cigarette companies pay for the enormous medical problems created by their product. Plaintiff has developed a new road to recovery via New York's Consumer Protection statute. The primary question now posed is one of law: Does section 349 of New York's General Business Law, designed to protect consumers against fraud, support a recovery by a health insurer whose costs were increased by the fraud. For the reasons set out below, section 349:(1) makes defendants liable for frauds the jury has found they committed against smokers; and (2) permits plaintiff to recover for the extra medical costs that it absorbed on behalf of its clients caused by their fraud induced smoking.
A jury verdict found defendants liable for a violation of section 349 of New York's General Business Law, causing some $17,000,000 in damages to plaintiff. Plaintiff seeks a judgment for the jury award, post verdict interest, costs and disbursements under the Federal Rules of Civil Procedure and attorney's fees under section 349. Defendants move to dismiss on the ground that no cause of action was proved.
Plaintiff is entitled to retain its jury award and to obtain interest from the day of that award. Plaintiff's motion for statutory attorney's fees under section 349 and costs and disbursements under Rule 54(d) of the Federal Rules of Civil Procedure will be covered in a separate memorandum. Defendants' motion for judgment is denied.
The series of related litigations in this court against defendants have been extensively described; the rulings in these matters are made a part of this memorandum. See Blue Cross & Blue Shield of N.J., Inc. v. Philip Morris, Inc., 2001 WL 811930 (E.D.N.Y. May, 22, 2001); Blue Cross & Blue Shield of N.J., Inc. v. Philip Morris Inc., 141 F.Supp.2d 320 (E.D.N.Y.2001); Blue...
To continue reading
Request your trial
-
In re Zyprexa Products Liability Litigation, No. 04-MD-1596.
...verdict for the plaintiff in a structural class action. See Blue Cross and Blue Shield of New Jersey, Inc. v. Philip Morris USA, Inc., 178 F.Supp.2d 198 In In re Simon II Litigation, 407 F.3d 125, 140 (2d Cir.2005), another tobacco case, the appellate court noted, without deciding, the ques......
-
Bell v. Farmers Ins. Exchange, No. A096721.
...875 F.2d 1196, 1205-1206; Pfizer, Inc. v. Lord (2d Cir.1971) 449 F.2d 119; Blue Cross & Blue Shield of N.J. v. Philip Morris, supra, 178 F.Supp.2d 198, 247-248; Long v. Trans World Airlines, Inc. (N.D.Ill.1991) 761 F.Supp. 1320, 1327; In re Antibiotic 115 Cal.App.4th 755 Antitrust Actions (......
-
Schwab v. Philip Morris USA, Inc., No. 04-CV-1945(JBW).
...for fraud by tobacco companies), rev'd, 407 F.3d 125 (2d Cir. 2005); Blue Cross & Blue Shield of New Jersey v. Philip Morris, Inc., 178 F.Supp.2d 198 (E.D.N.Y.2001) (discussing jury findings after 44 days of trial on health insurer's claim that tobacco companies distorted public body of kno......
-
Blue Cross and Blue Shield, N.J. v. Philip Morris, No. 98 CV 3287(JBW).
...New York Business Law. Motions to set aside the verdict were denied. See Blue Cross & Blue Shield of N.J., Inc. v. Philip Morris, Inc., 178 F.Supp.2d 198 (E.D.N.Y.2001). For the reasons indicated below fees are awarded in the amount of II. Factual and Procedural Background This and related ......