Hess v. Philip Morris U.S., Inc., SC12-2153

Decision Date02 April 2015
Docket NumberNo. SC12-2153,SC12-2153
CourtFlorida Supreme Court
PartiesELAINE HESS, etc., Petitioner, v. PHILIP MORRIS USA, INC., Respondent.

ELAINE HESS, etc., Petitioner,
v.
PHILIP MORRIS USA, INC., Respondent.

No. SC12-2153

Supreme Court of Florida

April 2, 2015


QUINCE, J.

Elaine Hess seeks review of the decision of the Fourth District Court of Appeal in Philip Morris USA, Inc. v. Hess, 95 So. 3d 254 (Fla. 4th DCA 2012), on the ground that it expressly and directly conflicts with the decision of the Third District Court of Appeal in Frazier v. Philip Morris USA Inc., 89 So. 3d 937 (Fla. 3d DCA 2012), approved, No. SC12-1401 (Fla. Apr. 2, 2015), and the decisions in Engle v. Liggett Group, Inc., 945 So. 2d 1246 (Fla. 2006), Pulmosan Safety Equip. Corp. v. Barnes, 752 So. 2d 556 (Fla. 2000), Kush v. Lloyd, 616 So. 2d 415 (Fla. 1992), Diamond v. E. R. Squibb & Sons, Inc., 397 So. 2d 671 (Fla. 1981), Laschke v. Brown & Williamson Tobacco Corp., 766 So. 2d 1076 (Fla. 2d DCA 2000),

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McLeod v. Barber, 764 So. 2d 790 (Fla. 5th DCA 2000), and Ambrose v. Catholic Soc. Servs., Inc., 736 So. 2d 146 (Fla. 5th DCA 1999), on a question of law. We have jurisdiction. See art. V, § 3(b)(3), Fla. Const.1

The question before the Court, in this Engle2-progeny case, is whether plaintiff's fraudulent concealment claim is barred pursuant to section 95.031(2), Florida Statutes (1993), the statute of repose for fraud claims, because the jury found no evidence of the smoker's reliance within the statute of repose period, i.e., from May 5, 1982, through May 5, 1994. We answer that question in the negative because it is the defendant's last act or omission which triggers the fraud statute of repose. Accordingly, we quash the Fourth District's decision in Hess, approve Frazier to the extent of its conclusion regarding the statute of repose, and approve Kush and Laschke. We reinstate the jury verdict rendered below.

FACTS AND PROCEDURAL HISTORY

As surviving spouse of Stuart Hess and personal representative of his estate, Elaine Hess filed a complaint against Philip Morris USA, Inc. ("PM USA"), in the Seventeenth Judicial Circuit, in and for Broward County, asserting claims of strict liability, fraudulent concealment, negligence, and conspiracy to commit fraud. In

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her fraudulent concealment claim, Mrs. Hess alleged that the defendants3 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. The complaint alleged that Mr. Hess detrimentally relied and died as a proximate result of the defendants' fraud. Punitive damages were sought in her fraudulent concealment and conspiracy to commit fraud claims. It was admitted in the complaint that Mr. Hess bore some fault for his smoking-related injuries and death. PM USA pleaded the statute of repose as an affirmative defense.

Mrs. Hess moved for partial summary judgment as to Engle affirmative defenses, arguing that the Engle Phase I findings were res judicata, and consequently, the relitigation of any defenses that were actually litigated or could have been litigated in Phase I were precluded. Mrs. Hess claimed that proof of reliance for her fraud claims was no longer an issue because of the defendants' involvement in fraud by concealment and the res judicata effect of the Phase I finding. The trial judge ruled that the statute of repose defense was unavailable.

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During the first phase of the trial,4 Mrs. Hess testified that Mr. Hess began smoking in the 1950s at twelve or thirteen years of age. He smoked about one to two packs a day when they met in 1963. Mrs. Hess also described Mr. Hess as a chain smoker, smoking two to three packs a day, which fluctuated. Mrs. Hess testified that Mr. Hess smoked Benson & Hedges 100's soft pack cigarettes—manufactured by PM USA—about 95% to 99% of the time, and smoked Marlboro products the remaining times. Mr. Hess smoked only filtered cigarettes because he believed they were safer and "caught all the bad stuff." Mr. Hess believed and trusted the cigarette companies. In the mid-1970s, Mr. Hess first attempted to stop smoking. He tried often to cut down or stop smoking. Mrs. Hess denied that he had ever quit smoking permanently. In February 1996, Mr. Hess was told that he had lung cancer. On cross-examination, Mrs. Hess admitted that she and Mr. Hess discussed the Surgeon General's report from the mid-1960s, which stated that smoking was harmful. Mr. Hess, however, had "tremendous doubt" as to the report because the cigarette company executives stated that smoking was not harmful, and he doubted the accuracy of the warnings. The jury found that Mr. Hess was addicted to cigarettes containing nicotine and that such addiction was a legal cause of his death.

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During the second phase of the trial, Mrs. Hess testified that she and her husband saw tobacco executives on television commenting that cigarettes were safe, and that Mr. Hess believed what the executives were saying. Mr. Hess did not attempt to quit prior to the mid-1970s because he believed the companies, he was taken in by the advertisements, and he was addicted. However, a friend of Mr. Hess testified at trial that Mr. Hess "was aware of smoking being dangerous" prior to the mid-1970s.

Mrs. Hess presented evidence that between 1953 and 1997, the tobacco companies were successful in using all their tricks and power to conceal the danger of smoking from the American people. In 1988, the Surgeon General reported that nicotine is addictive. Mrs. Hess offered evidence that despite knowing internally that nicotine was addictive, the tobacco companies denied publicly that it was addictive. Philip Morris first publicly admitted that nicotine was addictive around the year 2000. The jury heard a Tobacco Institute spokesperson in 1983 explain "we don't know what causes the ailments that have been attributed to cigarette smoking . . . . I don't think that there's a causal relationship established between cigarette smoking and any disease."

Before deliberations, the jury was instructed that PM USA "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

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health effects or addictive nature of smoking cigarettes or both." The trial judge also instructed the jury that it "must determine whether [Mr.] Hess relied to his detriment on any statements made by [PM USA] that omitted material information," and if he did so rely, then to consider whether punitive damages were warranted. The conspiracy to commit fraud claim was never submitted to the jury.

The jury awarded compensatory damages as follows: $2 million in favor of Mrs. Hess and $1 million in favor of Mr. Hess's son. PM USA and Mr. Hess were found by the jury to be 42% and 58% at fault, respectively. The jury was specifically asked on the verdict form, "Did [Mr.] Hess rely to his detriment on any statement by [PM USA] that omitted material information which caused or contributed to his injury and death?," and if so, whether such reliance took place before May 5, 1982, after May 5, 1982, or both before and after May 5, 1982. The jury indicated that Mr. Hess did rely and that it occurred only before May 5, 1982. Finding that Mrs. Hess was entitled to punitive damages, the jury awarded her $5 million. Final judgment was entered in favor of Mrs. Hess for $6.26 million.

PM USA moved for judgment as a matter of law on the fraudulent concealment claim, arguing that in light of the jury's finding that Mr. Hess's detrimental reliance took place only before May 5, 1982, PM USA did not defraud

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Mr. Hess within the twelve-year statute of repose period (May 5, 1982, through May 5, 1994). The trial court denied PM USA's motion.

On appeal to the Fourth District, PM USA claimed that the trial court erred in denying its motion for judgment as a matter of law on the fraudulent concealment claim. Hess, 95 So. 3d at 256. The district court noted that the elements of a fraudulent concealment claim are as follows:

(1) the tobacco companies concealed or failed to disclose a material fact; (2) the companies knew or should have known the material fact should be disclosed; (3) the companies knew their concealment of or failure to disclose the material fact would induce the plaintiffs to act; (4) the tobacco companies had a duty to disclose the material fact; and (5) the plaintiffs detrimentally relied on the misinformation.

Id. at 259 (quoting R.J. Reynolds Tobacco Co. v. Martin, 53 So. 3d 1060, 1068 (Fla. 1st DCA 2010)). The district court explained that while the Engle jury found that the tobacco companies "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," plaintiffs must still prove reliance in a fraud-based claim and juries must be instructed on reliance and damages. Id. (quoting Engle, 945 So. 2d at 1277). The district court noted that fraud claims, pursuant to the statute of repose, "must be begun within 12 years after the date of the commission of the alleged fraud." Id. at 260 (citing § 95.031(2), Fla. Stat. (1993)). Because it found that the "commission of the alleged fraud" necessarily includes all of the

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elements of a fraud claim, the Fourth District held that there must be evidence establishing all of the elements, including reliance, during the repose period. Id. at 261. Applying its holding to the Engle context, the district court determined that any fraud committed before May 5, 1982, is barred by the statute of repose. Id. at 260. The district court therefore concluded that the fraudulent concealment claim and the punitive damages award were foreclosed by the statute of repose because PM USA did not defraud Mr. Hess within the repose period as the jury found that Mr. Hess relied...

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