Hughes v. Tobacco Institute, Inc.

• Citation: 278 F.3d 417
• Decision Date: 28 December 2001
• Docket Number: No. 00-40718.,No. 00-40658.,00-40658.,00-40718.
• Parties: Ruth E. HUGHES, Individually and as Representative of the Estate of Sherman Hughes, Sr., Deceased, Plaintiff-Appellant, v. THE TOBACCO INSTITUTE, INC.; Philip Morris, Inc.; Brown & Williamson Tobacco Corporation; R.J. Reynolds Tobacco Co.; B.A.T. Industries PLC; Lorillard Tobacco Co.; The American Tobacco Company; Liggett Group, Inc.; United States Tobacco Company; The Council for Tobacco Research USA, Inc., Defendants-Appellees. Carlis Cole; et al., Plaintiffs, Carlis Cole; Charles Cole; Louis Ardoin; Charles Banks; Ruth Davis; Donald French; Lois French; Linda Goodwin; Daniel Hughes; Barbara Orr; Darrell Orr, Sr.; Dale Sonnier; Agnes Vondy, Individually & as Representative of the Estate of Luanne Davis, Deceased; Kaffie Williams, Individually & as Representative of the Estate of Jules Williams, Sr., Deceased; Frank O'Pry; Joseph Wray, the Son of Thomas H. Wray, Deceased, & Paula Wray Ewing, Executrix of the Estate of Thomas H. Wray, Deceased; Patricia Gibson, Individually & as Representative of the Estate of Danny Gibson, Deceased & as Next Friend of Paul Gibson, Patrick Gibson, Bryan Gibson, Gayla Gibson & Gabrielle Gibson, Minors, Plaintiffs-Appellants, Steven Faircloth, Intervenor Plaintiff-Appellant, v. The Tobacco Institute, Inc.; Philip Morris, Incorporated; Brown & Williamson Tobacco Corporation; R.J. Reynolds Tobacco Company; B.A.T. Industries PLC; Lorillard Tobacco Company; The American Tobacco Company; Liggett Group, Inc.; United States Tobacco Company; The Council for Tobacco Research USA, Inc., Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

278 F.3d 417

Ruth E. HUGHES, Individually and as Representative of the Estate of Sherman Hughes, Sr., Deceased, Plaintiff-Appellant, v. THE TOBACCO INSTITUTE, INC.; Philip Morris, Inc.; Brown & Williamson Tobacco Corporation; R.J. Reynolds Tobacco Co.; B.A.T. Industries PLC; Lorillard Tobacco Co.; The American Tobacco Company; Liggett Group, Inc.; United States Tobacco Company; The Council for Tobacco Research USA, Inc., Defendants-Appellees.

Carlis Cole; et al., Plaintiffs, Carlis Cole; Charles Cole; Louis Ardoin; Charles Banks; Ruth Davis; Donald French; Lois French; Linda Goodwin; Daniel Hughes; Barbara Orr; Darrell Orr, Sr.; Dale Sonnier; Agnes Vondy, Individually & as Representative of the Estate of Luanne Davis, Deceased; Kaffie Williams, Individually & as Representative of the Estate of Jules Williams, Sr., Deceased; Frank O'Pry; Joseph Wray, the Son of Thomas H. Wray, Deceased, & Paula Wray Ewing, Executrix of the Estate of Thomas H. Wray, Deceased; Patricia Gibson, Individually & as Representative of the Estate of Danny Gibson, Deceased & as Next Friend of Paul Gibson, Patrick Gibson, Bryan Gibson, Gayla Gibson & Gabrielle Gibson, Minors, Plaintiffs-Appellants, Steven Faircloth, Intervenor Plaintiff-Appellant, v. The Tobacco Institute, Inc.; Philip Morris, Incorporated; Brown & Williamson Tobacco Corporation; R.J. Reynolds Tobacco Company; B.A.T. Industries PLC; Lorillard Tobacco Company; The American Tobacco Company; Liggett Group, Inc.; United States Tobacco Company; The Council for Tobacco Research USA, Inc., Defendants-Appellees.

No. 00-40658.

No. 00-40718.

United States Court of Appeals, Fifth Circuit.

December 28, 2001.

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Jacqueline Marie Stroh (argued), Crofts & Callaway, San Antonio, TX, John T. Flood, Robert C. Hilliard, Hilliard & Munoz, Corpus Christi, TX, Russell W. Heald, Hilliard & Heald, Beaumont, TX, for Plaintiffs-Appellants.

Lea F. Courington, Scott William MacLaren, Gwinn & Roby, Dallas, TX, for The Tobacco Institute Inc.

Stephen Edward Scheve, Carla Powers Herron, Steven Richard Selsberg (argued), Peter M. Henk, Brian Paul Casey, Shook, Hardy & Bacon, Houston, TX, Gary R. Lang, Shook, Hardy & Bacon, Kansas City, MO, Lawrence Louis Germer, Germer, Bernsen & Gertz, Beaumont, TX, for Philip Morris Inc.

Michael W. Perrin, Tracey Maria Robertson, King & Spalding, Phillip B. Dye, Jr., Vinson & Elkins, Houston, TX, for Brown & Williamson Tobacco Corp. William Earl Marple, Jerome Richard Doak, Stephen Brian Yeager, Margaret I. Lyle, Jones, Day, Reavis & Pogue, Dallas, TX, Walter J. Crawford, Jr., Crawford & Olesen, Beaumont, TX, for R J Reynolds Tobacco Inc.

John J. Kenney, Simpson, Thacher & Bartlett, New York City, Tanner Truett Hunt, Jr., Wells, Peyton, Greenberg & Hunt, Beaumont, TX, for B.A.T. Industries PLC.

James W. Bartlett, Jr., Kasowitz, Benson, Torres & Friedman, Houston, TX, for Liggett Group Inc.

Mark E. Lowes, Jenkens & Gilchrist, Houston, TX, for Council for Tobacco Research USA Inc.

Appeals from the United States District Court for the Eastern District of Texas.

Before GARWOOD, DeMOSS and DENNIS, Circuit Judges.

DeMOSS, Circuit Judge:

Several Plaintiffs, seeking class status, sued numerous tobacco manufacturer and trade association Defendants, alleging negligence, strict liability, fraud, misrepresentation, breach of warranty, antitrust violations, negligent and intentional entrustment, public nuisance, unjust enrichment, aggravated assault, Federal Racketeer Influenced and Corrupt Organization Act (RICO) violations, and Deceptive Trade Practices Act (DTPA) violations. The district court severed Plaintiff Hughes' claims into a separate suit so it could proceed to resolution on the merits.

The Defendants sought dismissal on the pleadings in the severed case Hughes v. Tobacco Institute, asserting that § 82.004 of the Texas Practices and Remedies Code barred all Hughes' claims. The Defendants' motion was based in large part on this Court's opinion in Sanchez v. Liggett & Myers, Inc., 187 F.3d 486, 490 (5th Cir.1999), where we held that § 82.004 barred various claims predicated on the harmful or addictive nature of cigarettes. In response, Hughes argued that the Sanchez majority erroneously rejected controlling Texas Supreme Court precedent and informative legislative history, and that Sanchez's interpretation of § 82.004 violated the United States and Texas Constitutions.

On May 8, 2000, the district court granted the Defendants' motion to dismiss Hughes' claims. The court also sua sponte dismissed the claims in Cole v. Tobacco Institute, the suit from which Hughes had been severed, on the same grounds. The Plaintiffs from both suits appeal here. For the reasons expressed below, we AFFIRM the district court's judgment.

I. STANDARD OF REVIEW

Any party may move for judgment on the pleadings after the pleadings are closed. FED.R.CIV.P. 12(c). We review rule 12(c) dismissals de novo. St. Paul Mercury Ins. Co. v. Williamson, 224 F.3d 425, 440 n. 8 (5th Cir.2000). "[T]he central issue is whether, in the light most favorable to the plaintiff, the complaint states a valid claim for relief." Id. Pleadings should be construed liberally, and judgment on the pleadings is appropriate only if there are no disputed issues of fact and only questions of law remain. Voest-Alpine Trading USA Corp. v. Bank of China, 142 F.3d 887, 891 (5th Cir.1998). In ruling, the district court is confined to the pleadings and must accept all allegations contained therein as true. St. Paul Ins. Co. v. AFIA Worldwide Ins. Co., 937 F.2d 274, 279 (5th Cir.1991).

The district court, when presiding over a diversity case, must apply the law of the forum state. Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). And the court is "bound to apply the law as interpreted by the state's highest court." Texas Dep't of Hous. & Cmty. Affairs v. Verex Assurance, Inc., 68 F.3d 922, 928 (5th Cir.1995) (quoting Ladue v. Chevron U.S.A., Inc., 920 F.2d 272, 274 (5th Cir.1991)). "When there is no ruling by the state's highest court, it is the duty of the federal court to determine as best it can, what the highest court of the state would decide." Transcontinental, Gas Pipe Line Corp. v. Transportation Ins. Co., 953 F.2d 985, 988 (5th Cir.1992). This Court's interpretation of Texas law is binding on the district court, unless a subsequent state court decision or statutory amendment renders our prior decision clearly wrong. Batts v. Tow-Motor Forklift Co., 66 F.3d 743, 747 (5th Cir.1995).

II. TEX. CIV. PRAC. & REM. CODE § 82.004

In 1993, the Texas Legislature enacted § 82.004, which limits product liability actions against manufacturers and sellers of allegedly defective products. Specifically, it provides:

(a) In a products liability action, a manufacturer or seller shall not be liable if:

(1) the product is inherently unsafe and the product is known to be unsafe by the ordinary consumer who consumes the product with the ordinary knowledge common to the community; and

(2) the product is a common consumer product intended for personal consumption, such as sugar, castor oil, alcohol, tobacco, and butter, as identified in Comment i to Section 402A of the Restatement (Second) of Torts.

(b) For purposes of this section, the term "products liability action" does not include an action based on manufacturing defect or breach of an express warranty.

TEX. CIV. PRAC. & REM. CODE § 82.004. Another section defines a "products liability action" as:

any action against a manufacturer or seller for recovery of damages arising out of personal injury, death, or property damage allegedly caused by a defective product whether the action is based in strict tort liability, strict products liability, negligence, misrepresentation, breach of express or implied warranty, or any other theory or combination of theories.

TEX. CIV. PRAC. & REM. CODE § 82.001.

A. JUDICIAL INTERPRETATIONS OF § 82.004

No Texas Court has had occasion to apply § 82.004 in a tobacco suit. However, in Sanchez, this Court concluded, as a matter of first impression, that § 82.004 bars claims premised on the harmful or addictive nature of tobacco, including those brought as claims for fraud, misrepresentation, breach of implied warranty, DTPA violations, and conspiracy. 187 F.3d at 491.

In Harris v. Phillip Morris Inc., 232 F.3d 456, 457-58 (5th Cir.2000), and then again in Davis v. R.J. Reynolds Tobacco, Inc., 231 F.3d 928, 930 (5th Cir.2000), this Court revisited this issue, holding that suits for assault were likewise precluded by § 82.004. In both cases, we reiterated that § 82.004 bars all state law claims, not expressly exempted by the statute, that are predicated on personal injury or death from a defective product "regardless of the theory or combination of theories under which the claim is brought." Harris, 232 F.3d at 459; Davis, 231 F.3d at 930.

B. PLAINTIFFS' CLAIMS

The district court held that our Sanchez decision precluded "most of [P]laintiffs' claims as they arise from personal injury or death caused by a defective product." We agree. Under Sanchez and its progeny, § 82.004 bars the Plaintiffs' negligence, strict liability, fraud, misrepresentation, negligent and intentional entrustment, public nuisance, unjust enrichment, assault, and DTPA claims because they are all predicated on a product-defect theory. Sanchez, 187 F.3d at 491.

The district court did correctly recognize that some of the Plaintiffs' claims are unaffected by § 82.004's limitation on liability. Specifically, the court found that the Plaintiffs' breach of warranty claim survived because it is expressly exempted by the statute, and that the Plaintiffs' RICO and antitrust claims survived because a state statute cannot preempt federal law. However, the court went on to hold that each of these remaining claims failed for reasons other than the preclusive effect of § 82.004. We agree.

1. Plaintiffs' RICO Claim

The...