Liggett Group, Inc. v. Engle, No. 3D00-3400

• Court: Florida District Court of Appeals
• Writing for the Court: Before LEVY, GERSTEN, and GODERICH, JJ.
• Citation: 853 So.2d 434
• Parties: LIGGETT GROUP INCORPORATED; Brooke Group Limited; Philip Morris Incorporated; Council for Tobacco Research-USA, Incorporated; Tobacco Institute, Incorporated; Lorillard Tobacco Company; Lorillard, Incorporated; Brown & Williamson Tobacco Corporation; American Tobacco Company; and R.J. Reynolds Tobacco Company, Appellants, v. Howard A. ENGLE, M.D., et al., Appellees.
• Decision Date: 21 May 2003
• Docket Number: No. 3D00-3400, No. 3D00-3206 to 3D00-3208, No. 3D00-3210, No. 3D00-3215., No. 3D00-3212

853 So.2d 434

LIGGETT GROUP INCORPORATED; Brooke Group Limited; Philip Morris Incorporated; Council for Tobacco Research-USA, Incorporated; Tobacco Institute, Incorporated; Lorillard Tobacco Company; Lorillard, Incorporated; Brown & Williamson Tobacco Corporation; American Tobacco Company; and R.J. Reynolds Tobacco Company, Appellants,
v.
Howard A. ENGLE, M.D., et al., Appellees

Nos. 3D00-3400, 3D00-D00-3208, 3D00-3210, 3D00-3212, 3D00-3215.

District Court of Appeal of Florida, Third District.

May 21, 2003.

Rehearing and Rehearing Denied September 22, 2003.

853 So.2d 440

Steel Hector & Davis, and Alvin B. Davis; Clarke Silverglate Campbell Williams & Montgomery, and Mercer B. Clarke, and Kelly A. Luther; Kasowitz, Benson, Torres & Friedman, and Marc E. Kasowitz, Daniel R. Benson, and Aaron H. Marks (New York), for Appellants, Liggett Group Inc. and Brooke Group Holding, Inc

Shook, Hardy & Bacon, and Norman A. Coll; Winston & Strawn, and Dan K. Webb, and Stuart Altschuler (Chicago, Illinois); Dechert Price & Rhoads, and Robert C. Heim, and Joseph Patrick Archie (Philadelphia, Pennsylvania), for Appellant, Philip Morris Incorporated.

Carlton Fields, and Benjamine Reid, and Wendy F. Lumish; Jones, Day, Reavis & Pogue, and James R. Johnson, and Diane G. Pulley (Atlanta, Georgia); Jones, Day, Reavis & Pogue, and Robert H. Klonoff, and Charles R.A. Morse (Washington, D.C.), for Appellant, R.J. Reynolds Tobacco Company.

Adorno & Yoss, and Anthony N. Upshaw; King & Spalding, and Gordon A. Smith, and Richard A. Schneider, and Barry Goheen, and Stephen B. Devereaux (Atlanta, Georgia), for Appellant, Brown & Williamson.

Greenberg Traurig, and Arthur J. England, Jr., and David L. Ross, and Elliot H. Scherker; Shook, Hardy & Bacon, and James T. Newsom (Kansas City, Missouri), for Appellants, Lorillard, Inc., and Lorillard Tobacco Company.

Debevoise & Plimpton, and Joseph P. Moodhe (New York), for Appellant, Counsel for the Council for Tobacco Research-U.S.A., Incorporated.

Renaldy J. Gutierrez, and Kathleen M. Sales; Covington & Burling, and James A. Goold (Washington, D.C.), for Appellant The Tobacco Institute, Incorporated.

Stanley M. Rosenblatt, and Susan Rosenblatt, for Appellees.

Before LEVY, GERSTEN, and GODERICH, JJ.

Rehearing and Rehearing En Banc Denied September 22, 2003.

GERSTEN, J.

This is an appeal from a final judgment in a smokers' class action law suit seeking damages against cigarette companies and industry organizations for alleged smoking related injuries. The final judgment awarded $12.7 million in compensatory damages to three individual plaintiffs, and $145 billion in punitive damages to the entire class. We reverse with instructions that the class be decertified.

I. Overview

In May of 1994, six named individuals filed a class action complaint seeking damages for injuries allegedly caused by smoking. All six alleged they were unable to stop smoking because they were addicted to nicotine and, as a result, developed medical problems ranging from cancer and heart disease to colds and sore throats.

853 So.2d 441

They sought over $100 billion in compensatory damages on theories of strict liability, negligence, breach of express warranty, breach of implied warranty, fraud, conspiracy to commit fraud, and intentional infliction of emotional distress. In addition, the plaintiffs sought over $100 billion in punitive damages on their claims for fraud, conspiracy, and emotional distress. The defendants are the major domestic cigarette companies and two industry organizations (hereafter collectively referred to as "defendants").¹

The class of smokers and their survivors (hereafter collectively referred to as "plaintiffs") was certified in October of 1994 as a nationwide class action under Florida Rule of Civil Procedure 1.220(b)(3). The trial court defined the class as: "All United States citizens and residents, and their survivors, who have suffered, presently suffer or have died from diseases and medical conditions caused by their addiction to cigarettes that contain nicotine."

Thereafter in 1996, this Court reduced the class to include Florida smokers only. R.J. Reynolds Tobacco Co. v. Engle, 672 So.2d 39 (Fla. 3d DCA 1996). This Court did not approve any trial plan for the case, because no trial plan had been issued at that time.

In February of 1998, the trial court issued its first trial plan, which provided for the trial proceedings to be divided into three phases.² Phase 1 consisted of a year-long trial on liability and entitlement to punitive damages. The jury considered common issues relating exclusively to defendants' conduct and the general health effects of smoking. At the conclusion of Phase 1, the jury rendered a verdict for the class on all counts.

In Phase 2, the jury determined that the three individual class representatives were entitled to compensatory damages in varying amounts which were offset by their comparative fault. The total award was $12.7 million. Thereafter, the jury determined the lump-sum amount of punitive damages for the entire class to be $145 billion, without allocation of that amount to any class member.

The defendants filed several post-verdict motions, including motions for remittitur and class decertification. The trial court

853 So.2d 442

did not hold hearings on the post-verdict motions. Instead, in November of 2000, the trial court entered an "Omnibus Order on All Pending Motions" denying most of the defense motions, with two minor exceptions.³ The Omnibus Order granted judgment in the plaintiffs' favor in all other respects, ordering immediate payment to the individual plaintiffs, and directing the defendants to immediately pay the $145 billion in punitive damages into the court registry for the benefit of the entire class. The trial court reserved jurisdiction to "conduct further proceedings pursuant to the mandate of the Third District Court of Appeal"—an apparent reference to the coming Phase 3 trials and this Court's 1996 ruling that individual hearings are required "on at least the issue of damages, if not other issues as well." R.J. Reynolds Tobacco Co. v. Engle, 672 So.2d at 41

In Phase 3, which has not yet begun, new juries will decide the individual liability and compensatory damages claims for each class member (estimated to number at least 700,000). The trial court will then divide the $145 billion punitive damages award equally among the successful class members. Pursuant to the Omnibus Order, interest on the $145 billion punitive award began accruing immediately at $14.5 billion annually. The defendants now appeal the adverse Omnibus Order.

II. Class Decertification Required

Although the emotional appeal of the class representatives' claims is compelling, our job as appellate judges is not to be swayed by emotion where to do so results in violating established legal principles. The law in the instant case clearly mandates that the trial court order certifying the class be reversed, with instructions that the class members may pursue their claims on an individualized basis.

Under Florida Rule of Civil Procedure 1.220(d)(1), a class-certification order may be altered or amended at any time before entry of a judgment on the merits. Class-certification orders necessarily precede substantial development of the issues and facts. For this reason, a court is required to reassess its class rulings as the case develops. See Barnes v. American Tobacco Co., 161 F.3d 127, 140 (3d Cir. 1998); In re Gen. Motors Corp. Pick-Up Truck Fuel Tank Product Liab. Litig., 55 F.3d 768, 792 n. 14 (3d Cir.1995); Stott v. Haworth, 916 F.2d 134, 139 (4th Cir.1990); Kuehner v. Heckler, 778 F.2d 152, 163 (3d Cir.1985); Richardson v. Byrd, 709 F.2d 1016, 1019 (5th Cir.1983). Thus, even after a certification order is entered, "the judge remains free to modify it in the light of subsequent developments in the litigation." Forehand v. Florida State Hosp., 89 F.3d 1562, 1566 (11th Cir.1996).

In 1996, this Court affirmed as modified the trial court order certifying the class. See R.J. Reynolds Tobacco Co., et al. v. Engle, et al., 672 So.2d 39 (Fla. 3d DCA 1996). At that time, we limited the case to a Florida-only class based upon our finding that a nationwide class would be unmanageable because it would comprise in excess of one million class members. See R.J. Reynolds Tobacco Co., et al. v. Engle, et al., 672 So.2d at 41. This was the first smokers' case to be certified as a class action anywhere in the country. At the time of certification, no trial plan had been

853 So.2d 443

issued and the plaintiffs estimated the class size at approximately 300,000 people

Two years after class certification, the trial court issued its first trial plan. As finally implemented, the plan provided that trial would be divided into three phases. In Phase 1, which has been completed, the jury made a general finding that smoking causes some, but not all, of the diseases in issue and that cigarettes containing nicotine are addictive. The jury also made a general finding that the defendants had engaged in unspecified conduct that "rose to a level that would permit a potential award or entitlement to punitive damages."

In Phase 2, which has also been completed, the same jury found the three class representatives established liability and compensatory damages with respect to their individual claims. The jury then awarded a lump sum of $145 billion dollars in punitive damages to the entire class, without allocation to any class member.

The trial plan provides that Phase 3, which has not yet begun, will consist of a series of individual trials before new juries to determine whether the defendants are liable to the other class members, and the amount of any compensatory damages. The plaintiffs have now more than doubled their original estimate of class size from 300,000 to at least 700,000. After completion of the estimated 700,000 or more class member individual trials,...