Iron Workers Ins. Fund v. Philip Morris Inc.

• Decision Date: 23 November 1998
• Docket Number: No. 1:97-CV-1422.,1:97-CV-1422.
• Citation: 29 F.Supp.2d 801
• Parties: IRON WORKERS LOCAL UNION NO. 17 INSURANCE FUND AND ITS TRUSTEES, et al., Plaintiffs, v. PHILIP MORRIS INCORPORATED, et al., Defendants.
• Court: U.S. District Court — Northern District of Ohio

29 F.Supp.2d 801

IRON WORKERS LOCAL UNION NO. 17 INSURANCE FUND AND ITS TRUSTEES, et al., Plaintiffs, v. PHILIP MORRIS INCORPORATED, et al., Defendants.

No. 1:97-CV-1422.

United States District Court, N.D. Ohio, Eastern Division.

November 23, 1998.

COPYRIGHT MATERIAL OMITTED

Eben O. McNair, Timothy Joseph Gallagher, Schwarzwald & Rock, Cleveland, OH, Jack Landskroner, Landskroner Law Firm, Cleveland, OH, John M. Broaddus, Robert J. Connerton, Connerton, Ray & Simon, Washington, DC, Michael C. Spencer, Milberg, Weiss, Bershad, Hynes & Lerach, New York City, Patrick J. Coughlin, Frank J. Janecek, Jr., Scott H. Saham, Milberg, Weiss, Bershad, Hynes & Lerach, San Diego, CA, Paul J. Pennock, Sedgwick, Detert, Moran & Arnold, New York City, Jerry Kristal, Weitz & Luxenberg, New York City, Lembhard G. Howell, Richard G. Piccioni, C. Cleveland Stockmeyer, Michael E. Withey, Paul L. Stritmatter, Philip G. Arnold, Kevin Coluccio, Keith L. Kessler, J. Murray Kleist, Stritmatter, Kessler, Whelan & Withey, Seattle, WA, George Kargianis, Kargianis, Watkins, Marler, Seattle, WA, Roger M. Adelman, Washington, DC, G. Robert Blakey, Notre Dame Law School, Notre Dame, IN, Einer R. Elhauge, Harvard Law School, Cambridge, MA, Mitchell M. Breit, Karen J. Sabine, Weitz & Luxenberg, New York City, for Local 17 Intl. Assoc. of Bridge, & Iron Workers Insurance Fund, and its Trustees, plaintiffs.

Lawrence R. Desideri, Thomas J. Frederick, Dan K. Webb, Kevin J. Narko, Bradley E. Lerman, Winston & Strawn, Chicago, IL Hugh E. McKay, Robert D. Anderle, Porter, Wright, Morris & Arthur, Cleveland, OH, for Philip Morris, Inc., defendant.

Roger Allen Hipp, Jones, Day, Reavis & Pogue, Cleveland, OH, Matthew A. Kairis, Jeffrey J. Jones, Melanie S. Fahey, Jones, Day, Reavis & Pogue, Columbus, OH, Daniel F. Kolb, Davis, Polk & Wardwell, New York City, for RJR Nabisco, Inc., defendant.

Phillip J. Campanella, Calfee, Halter & Griswold, Cleveland, OH, Kenneth N. Bass, Paul Taylor, Kirkland & Ellis, Washington, DC, for Brown & Williamson Tobacco Corporation, American Tobacco Company, defendants.

John Winship Read, Amanda Martinsek, Vorys, Sater, Seymour & Pease, Cleveland, OH, for British American Tobacco Co., Ltd., defendant.

Percy Squire, Lloyd Pierre-Louis, Bricker & Eckler, Columbus, OH, Thomas D. Lambros, Janik & Forbes, Cleveland, OH, Mark G. Cunha, Patrick D. Bonner, Jr., Randall Rainer, Simpson, Thacher & Bartlett, New York City, for B.A.T. Industries P.L.C., defendant.

Craig E. Gustafson, Gary R. Long, William J. Crampton, Bruce R. Tepekian, Shook, Hardy & Bacon, Kansas City, MO, Samuel R. Martillotta, Mansour, Gavin, Gerlack & Manos, Cleveland, OH, Patrick M. McLaughlin, John F. McCaffrey, McLaughlin & McCaffrey, Cleveland, OH, for Lorillard Tobacco Company, defendant.

Thomas P. Meaney, Jr., Kenneth J. Walsh, Tyler Lee Mathews, McDonald, Hopkins, Burke & Haber, Cleveland, OH, Marc E. Kasowitz, Marie V. Santacroce, Michael M. Fay, Julie R. Fischer, Marie V. Santocroce, Kasowitz, Benson, Torres & Friedman, New York City, for Liggett Group, Inc., defendant.

Steven D. Bell, Ulmer & Berne, Cleveland, OH, for United States Tabacco Sales and Marketing Company, defendant.

David J. Hooker, Thomas J. Collin, Robert Francis Ware, Jr., Thompson, Hine & Flory, Cleveland, OH, Steven Klugman, Harry Zirlin, Anne E. Cohen, Debevoise & Plimpton, New York City, for Tobacco Research U.S.A., Inc., The Counsel, defendant.

Charna E. Sherman, David J. Michalski, James M. Drozdowski, Kathleen Balthrop Havener, Hahn, Loeser & Parks, Cleveland, OH, for Tobbacco Institute, Inc., defendant.

Susan V. Belanger, Arter & Hadden, Cleveland, OH, John P. Gartland, Arter & Hadden, Columbus, OH, Michael C. Lasky, Davis & Gilbert, New York City, Hill & Knowlton, Inc., for Hill & Knowlton, Inc., defendant.

OPINION AND ORDER

GWIN, District Judge.

On October 5, 1998, the defendants in this class action tobacco litigation filed four motions for summary judgment. With these motions, defendants first seek judgment on the argument that the statute of limitations stops certain of plaintiffs' claims [Doc. 272]. Second, the defendants ask for judgment on plaintiffs' civil conspiracy claim and as to plaintiffs' right to punitive damages [Doc. 277]. Third, the defendants solicit judgment on the argument that plaintiffs are unable to prove causation [Doc. 279]. Finally, the defendants request judgment on the argument that Plaintiff Funds did not suffer cognizable injury [Doc. 281].

I. Summary of Motions

Defendants first ask for judgment based on the statute of limitations. With this argument, the defendants say that plaintiffs were aware of the facts leading to their claims long before they sued on May 20, 1997. In claiming plaintiffs' causes of action accrued long ago, defendants claim the facts supporting plaintiffs' claims were matters of common knowledge for decades. Defendants say the statute of limitations stops all or part of plaintiffs' claims.

Among the arguments made in their statute of limitations motion, defendants say plaintiffs may not recover for antitrust violations more than four years before they filed this action. Defendants argue that the statute of limitations for RICO also stops claims based on conduct occurring before May 20, 1993. Defendants also contend in their first motion that plaintiffs' claims for conspiracy are time-barred because the underlying actions are time-barred.

The Court first decides whether defendants are entitled to judgment on statute of limitations grounds as to plaintiffs' action under the Ohio Corrupt Activity Act. The Ohio Corrupt Activity Act has a significantly different and much more liberal statute of limitation. After this examination, the Court finds defendants are not entitled to judgment on the plaintiffs' Ohio Corrupt Activity Act claim on statute of limitations grounds.

To decide whether the statute of limitation stop plaintiffs' other claims, the Court first determines when plaintiffs' causes of action accrued. To make this decision, the Court decides whether the discovery accrual rule or the fraudulent concealment exception applies.

The Court concludes that plaintiffs cannot successfully invoke the fraudulent concealment exception to the statute of limitations. However, after reviewing Sixth Circuit precedent on when these claims accrue, the Court finds genuine factual issues about when plaintiffs' federal RICO claim accrued. This prevents summary judgment on the federal RICO claim. The statute of limitations issues are best decided by a jury at trial. Therefore, the Court will deny the defendants' first summary judgment motion.

As to plaintiffs' antitrust claims, the Court finds that plaintiffs' cause of action accrued more than four years before they filed this action. Also, the Court finds that plaintiffs fail to show that any fraudulent concealment should toll this limitation period. Finally, the Court finds that plaintiffs fail to show that a new and independent act that is not merely a reaffirmation of previous acts within four years of the filing of this action. The Court therefore grants defendants motion for judgment as to the federal Clayton Act claim (Count IV) and the state Valentine Act claim (Count X).

In their second motion, the tobacco industry defendants argue that plaintiffs' state law civil conspiracy claim fails because the unlawful underlying acts, antitrust and RICO claims, are themselves conspiracies. Further, the defendants argue that plaintiffs cannot recover punitive damages because the acts underlying the conspiracy do not allow punitive damages. The Court grants that portion of the defendants' second motion for summary judgment on plaintiffs' request for punitive damages on their civil conspiracy claim (Count XI). However, the Court denies that portion of defendants' motion for summary judgment on the plaintiffs' conspiracy claim.

With their third motion for summary judgment, defendants seek judgment on the claim that the plaintiffs' are unable to prove causation. In making the claim that no material facts support plaintiffs' ability to show causation, the defendants first argue that plaintiffs do not show that the funds would have changed their operation if they had knowledge of defendants' alleged unlawful conduct. Defendants also say that plaintiffs present insufficient evidence that plaintiffs could have altered the smoking habits and medical expenses of their beneficiaries.

Also in their causation motion, defendants argue that the Plaintiff Funds cannot quantify the damage caused by any alleged wrongdoing because a statistical damage model does not purport to link the plaintiffs' claimed damages to anything the Funds did or did not do because of the defendants' alleged wrongful conduct.

Upon review of the defendants' causation motion, the Court finds that the defendants reargue much of the same ground covered in this Court's September 10, 1998 order denying defendants' motion to dismiss. In this most recent motion, the defendants again fail to convince the Court that the Court should give judgment on these grounds.

In their fourth motion for summary judgment, the defendants argue that because these Taft-Hartley Fund trusts received sufficient contributions to cover health care costs, any increased medical expenditures to treat smoking beneficiaries did not damage individual Plaintiff Funds. With this motion, defendants try to turn rudimentary economics on its head. In our free market economy, defendants suggest that costs do not matter. But of course, when costs increase, demand reduces. With any increased cost resulting from illness caused by defendant's conduct, the Plaintiff Funds must reduce benefits it otherwise affords its beneficiaries. The utility of the Plaintiff Funds changes for the worse when costs increase because of illegal conduct.

After review, the Court denies defendants' third and fourth motions for summary judgment. Both motions essentially rehash...