Burton v. R.J. Reynolds Tobacco Co.

• Citation: 205 F.Supp.2d 1253
• Decision Date: 21 June 2002
• Docket Number: No. 94-2202-JWL.,94-2202-JWL.
• Parties: David BURTON, Plaintiff, v. R.J. REYNOLDS TOBACCO COMPANY, Defendant.
• Court: U.S. District Court — District of Kansas

205 F.Supp.2d 1253

David BURTON, Plaintiff, v. R.J. REYNOLDS TOBACCO COMPANY, Defendant.

No. 94-2202-JWL.

United States District Court, D. Kansas.

June 21, 2002.

Kenneth B. McClain, Nicholas E. Mebruer, Nimrod T. Chapel, Jr., Donald H. Loudon, Jr., Scott B. Hall, Humphrey, Farrington, McClain & Edgar, Independence, MO, Gregory Leyh, Kansas City, MO, for David Burton.

M. Warren McCamish, Williamson & Cubbison, Kansas City, KS, Junius C. McElveen, Jr., Jones, Day, Reavis & Pogue, Washington, DC, Sydney Bosworth McDole, William E. Marple, Thomas C. Pavlik, Clay Alfred Hartmann, Stephen B. Yeager, Jones, Day, Reavis & Pogue, Dallas, TX, Stephen J. Kaczynski, Michael A. Nims, Paul G. Crist, Randal S. Baringer, Jones, Day, Reavis & Pogue, Cleveland, OH, Catherine L. Bjorck, Jones, Day Reavis & Pogue, Dallas, TX, for R.J. Reynolds Tobacco Co., Inc.

James D. Griffin, Blackwell Sanders Peper Martin LLP, Kansas City, MO, Frank C. Woodside, III, Mary-Jo Middelhoff, Dinsmore & Shohl LLP, Cincinnati, OH, Bruce G. Sheffler, James Mirro, Peter K. Eck, Nicholas Booke, Chadbourne & Parke LLP, New York, NY, James M. Warden Warden Triplett Grier, Overland Park, KS, for American Tobacco Co.

James D. Griffin, Blackwell Sanders Peper Martin LLP, Kansas City, MO, Frank C. Woodside, III, Mary-Jo Middelhoff, Dinsmore & Shohl LLP, Cincinnati, OH, for Brown and Williamson Tobacco Corp.

MEMORANDUM AND ORDER

LUNGSTRUM, District Judge.

• Introduction

Plaintiff filed this personal injury products liability action against defendant R.J Reynolds Tobacco Company ("Reynolds") claiming that defendant's cigarettes caused his peripheral vascular disease ("PVD") and addiction. Plaintiff asserted that Reynolds manufactured a defective product, failed to warn him that smoking causes addiction and PVD, negligently failed to test or research its product, fraudulently concealed the fact that smoking cigarettes causes addiction and PVD, and conspired with other members of the tobacco industry to fraudulently conceal the health effects of smoking. The case proceeded to trial and, on February 22, 2002, the jury returned a verdict in favor of defendant on plaintiff's design defect and conspiracy claims and in favor of plaintiff on the claims for failure to warn, negligent testing and research and fraudulent concealment. The jury awarded plaintiff $196,416 in compensatory damages and authorized the court to impose punitive damages. On May 16, 2002, pursuant to K.S.A. § 60-3702, the court held a hearing to determine the amount of punitive damages to be awarded to plaintiff.

Having considered all of the evidence introduced in the trial of this case and the additional evidence which was admitted at the hearing on punitive damages, as well as the papers filed by the parties and the arguments of counsel, the court is now prepared to issue its ruling concerning the amount to be awarded as punitive damages in this case. For the reasons set forth below, the court directs the Clerk of the Court to modify and amend the judgment previously entered in this case to award plaintiff punitive damages in the amount of $15,000,000.

• Discussion

• Overview

The court has carefully evaluated the seven factors listed in K.S.A. § 60-3702(b) as factors which the court "may" consider at a proceeding to determine the amount of punitive damages to be awarded. In addition, recognizing that these factors are not exclusive, Scheufler v. General Host Corp., 915 F.Supp. 236, 241 (D.Kan.1995); Citizens State Bank v. Shearson Lehman Brothers, Inc., 874 F.Supp. 307, 310 (D.Kan.1994); Patton v. TIC United Corp., 859 F.Supp. 509, 513 (D.Kan.1994), and that they should not be applied purely mechanistically, Shearson, 874 F.Supp. at 310, the court has attempted to focus on the gravamen of the conduct for which punitive damages have been determined appropriate by the jury in order to carry out the purposes for which the people of the State of Kansas, acting through their legislature, have authorized the assessment of punitive damages.

In this case, the jury found that the defendant R.J. Reynolds should be punished for its fraudulent concealment of information concerning the addictive nature of its product and its propensity to cause PVD. That conduct should be evaluated not only standing alone but, from the perspective of determining the punishable state of mind of the defendant, also in the context of the overwhelming evidence of its determination to withhold, mislead and deceive the public about the dangers of its product, thereby depriving the public of the opportunity to make a free and knowing decision about whether or not to smoke, how much to smoke and how difficult quitting smoking might be. Thus, as the jury found here, it is not for making a dangerous product that defendant should be punished. It is for concealing how dangerous the product is that R.J. Reynolds merits punishment.

Throughout this case the defendant vigorously proclaimed that smoking cigarettes is a choice, that people have been aware of its dangers for years, and that a person who smokes should be deemed to have assumed the risks associated with smoking. If Reynolds had made full disclosure, that argument would have great appeal in a free society. But, a free society where people are permitted to engage in conduct which may not always be beneficial or healthful to them depends on the manufacturers and purveyors of the products which people choose to consume being frank and open about the dangers of which they are aware in order to permit truly free choice. Here, the insidious nature of Reynolds' fraudulent concealment lies not only in the evidence of its bare failure to disclose vital information but also in the evidence of its campaign to obscure the public's ability to appreciate the risks of smoking by attacking the credibility of the public health community's concerns while at the same time withholding and ignoring evidence which was within its control that would have made the truth available to consumers.

The fact that Reynolds concealed the addictive nature of tobacco is particularly nefarious. The evidence established that Reynolds recognized many years ago that the company was in the nicotine delivery business and that without the addictive qualities of nicotine people would not consume the company's product, or certainly not to the extent that has made the company highly profitable. Even if the causal relationship between PVD and smoking had been disclosed, concealment of the fact that smoking, once begun, is no longer a free choice, but rather is one that is driven by the pharmacological effects of nicotine, would have substantially undercut the value of the knowledge of other harmful propensities of tobacco. That, the evidence established, was precisely the plight of Mr. Burton. He was unwilling and unable to quit smoking, even as he experienced smoking's deleterious effects, because of the hold of an addiction on him which he did not realize had been foisted upon him and which might require more than sheer willpower to break. That is why the jury, in all likelihood, thought Reynolds should be punished. This court agrees.

• The Factors

• Likelihood at the time of misconduct that serious harm would arise from defendant's misconduct

Concealment of the addictive nature of nicotine in the context of the knowledge by Reynolds of its health-related dangers, including specifically the causal relationship with PVD, brought with it a high likelihood at the time of the misconduct that serious harm would arise. Here, of course, serious harm-very foreseeable serious harm-occurred to Mr. Burton. He became addicted to a product which he consumed to the point that it caused him to so lose circulation in his legs that they both had to be amputated. This factor weighs heavily against Reynolds. It did not deceive him about facts which might affect the value of a luxury automobile, for example. It engaged in misconduct which consisted of specifically withholding information about how seriously harmful the product is to the persons of those enticed to use it.

In its submission to the court, Reynolds attempts to reargue its position that the evidence indicated that its concealment did not cause Mr. Burton's case of PVD. The jury found that it did and the court upheld the jury's verdict in its May 9, 2002 order. The court, thus, rejects Reynold's reassertion of the argument that the evidence it concealed would not likely have impacted whether Mr. Burton would have started or stopped smoking. The jury found otherwise and the court agrees.

• Degree of the defendant's awareness of that likelihood

The direct evidence on this point was not extensive. But, Reynolds had to have been aware of that likelihood. In fact, why else would Reynolds have concealed it except to hide from consumers the true nature of the risks of buying and using its product? This factor weighs heavily against Reynolds.¹

• Profitability of the misconduct

Reynolds is hugely profitable. Reynolds disclosed that it realized $505 million in net income in 2001, had over $1 billion in cash and cash equivalents and over $9 billion in stockholder equity. Plaintiff's expert testified that over the period from 1953 to 2001, Reynolds realized $34.6 billion in operating profit. While Reynolds presented expert testimony indicating that this figure was somewhat inflated because it included some profit from non-tobacco operations, an amount which Reynolds never quantified, and reflected operating profit instead of net income, there is no question that Reynolds reaped enormous profits from the sale of its cigarettes.

The court infers from the evidence that but for Reynold's misconduct, fewer people would have begun to smoke and those who had begun but desired to quit would have realized that the task might involve professional help. Knowledge that a product is not only risky to your health but also is addictive would seem to be a severe deterrent to...