Naegele v. REYNOLDS TOBACCO COMPANY

• Decision Date: 05 August 2002
• Docket Number: No. S090420.,S090420.
• Citation: 28 Cal.4th 856,50 P.3d 769,123 Cal.Rptr.2d 61
• Court: California Supreme Court
• Parties: Joseph NAEGELE, as Trustee, etc., et al., Plaintiffs and Appellants, v. RJ. REYNOLDS TOBACCO COMPANY et al., Defendants and Respondents. Richard Donaldson, Plaintiff and Appellant, v. R.J. Reynolds Tobacco Company et al., Defendants and Respondents.

123 Cal.Rptr.2d 61

28 Cal.4th 856

50 P.3d 769

Joseph NAEGELE, as Trustee, etc., et al., Plaintiffs and Appellants, v. RJ. REYNOLDS TOBACCO COMPANY et al., Defendants and Respondents.

Richard Donaldson, Plaintiff and Appellant, v. R.J. Reynolds Tobacco Company et al., Defendants and Respondents.

No. S090420.

Supreme Court of California.

August 5, 2002.

Wartnick, Chaber, Harowitz, Smith & Tigerman, Wartnick, Chaber, Harowitz & Tigerman, Harry F. Wartnick, Madelyn J. Chaber, Phillip Scott Chan, San Francisco; Law Offices of Daniel U. Smith, Daniel U. Smith, Los Angeles, and Ted W. Pelletier for Plaintiffs and Appellants.

Meyers, Nave, Riback, Silver & Wilson and Andre J. Saltzman for Professor Stephen D. Sugarman as Amicus Curiae on behalf of Plaintiffs and Appellants.

Bill Lockyer, Attorney General, Richard M. Frank, Chief Assistant Attorney General, Dennis Eckhart, Assistant Attorney General, and Peter M. Williams, Deputy Attorney General, as Amici Curiae on behalf of Plaintiffs and Appellants.

Howard, Rice, Nemerovski, Canady, Falk & Rabkin, H. Joseph Escher III, Ethan P. Schulman, Keith D. Kessler, Richard Shively, San Francisco, and Anne Marie Eileraas for Defendant and Respondent R.J. Reynolds Tobacco Company.

Sedgwick, Detert, Moran & Arnold and Frederick D. Baker, San Francisco, for Defendant and Respondent Brown & Williamson Tobacco Corporation.

Fred Main for California Chamber of Commerce as Amicus Curiae on behalf of Defendants and Respondents.

William L. Gausewitz for The Alliance of American Insurers, The American Insurance Association, The National Association of Independent Insurers, The National Association of Mutual Insurance Companies and The Reinsurance Association of America as Amici Curiae on behalf of Defendants and Respondents.

KENNARD, J.

Tobacco-related illnesses are a leading cause of death in this state and worldwide, and these debilitating illnesses have imposed enormous costs on tobacco users, their families, and society. (See, e.g., Health & Saf.Code, § 104350, subd. (a).) Although the risk of illness and death from tobacco use has become increasingly well known in recent decades, tobacco consumption continues to be widespread, at least in part because tobacco contains nicotine, a substance the Surgeon General of the United States has determined to be addictive. (U.S. Surgeon Gen. Rep., The Health Consequences of Smoking: Nicotine Addiction (1988) [as of Aug. 5, 2002].) In 1987, the California Legislature enacted former section 1714.45 of California's Civil Code ¹ (which we here sometimes refer to as the Immunity Statute) stating that in a product liability action a court could not require a manufacturer or seller to pay damages for injuries caused by certain products, including tobacco products, that are inherently unsafe and known to be unsafe by the ordinary consumer of that product. (Stats.1987, ch. 1498, § 3, p. 5778 (hereafter sometimes former section 1714.45).) Ten years later, the Legislature repealed the Immunity Statute as it applied to manufacturers of tobacco products. (Stats.1997, ch. 570, § 1.)

In the companion case of Myers v. Philip Morris Companies, Inc. (2002) 28 Cal.4th 828, 123 Cal.Rptr.2d 40, 50 P.3d 751 (Myers), we consider how the repeal of the statutory immunity affects the liability of tobacco manufacturers for injuries caused by tobacco use before, during, and after the 10-year period during which the Immunity Statute was in effect. In Myers, we hold that, because the repeal was not retroactive, the Immunity Statute continues to provide an immunity for tobacco companies in product liability actions, but only for conduct they engaged in during the 10-year period when the Immunity Statute was in effect.² The liability of tobacco companies based on their conduct outside the 10-year period is governed by general tort principles.

Here, we are asked to decide what forms of conduct by tobacco companies during the 10-year immunity period come within the protection conferred by the Immunity Statute. The Court of Appeal held that, as applied to liability for injuries caused by tobacco products, the Immunity Statute covers all conduct by tobacco companies acting as manufacturers or sellers of tobacco products except conduct resulting in manufacturing defects or breach of express warranty. We, however, conclude that the Immunity Statute's protection is not so broad and that it does not extend to allegations that tobacco companies, in the manufacture of cigarettes, used additives that exposed smokers to dangers beyond those commonly known to be associated with cigarette smoking.

I

Plaintiff Edwin Brigham smoked cigarettes from 1950 until 1996, when he was diagnosed with lung cancer. He sued defendants R.J. Reynolds Tobacco Company and Brown & Williamson Tobacco Corporation seeking personal injury damages on theories of negligence, product liability, and fraud. Defendants demurred, citing the Immunity Statute as a bar to all of plaintiffs causes of action. The trial court sustained defendants' demurrer but granted plaintiff leave to amend the complaint.

When defendants thereafter demurred to plaintiffs first amended complaint, the trial court sustained the demurrer and dismissed plaintiffs lawsuit against defendants. On plaintiffs appeal, the Court of Appeal affirmed.³ We granted plaintiffs petition for review.

II

At issue here is what types or categories of conduct by tobacco companies fall within the immunity given to them by the Immunity Statute, which was in effect from January 1, 1988, until December 31, 1997. The statute specifies that the immunity it gives to manufacturers and sellers of specified inherently unsafe products, including tobacco, applies in product liability actions. (Former § 1714.45, subd. (a), Stats.1987, ch. 1498, § 3, pp. 5778-5779.) The statute defines a product liability action as "any action for injury or death caused by a product, except that the term does not include an action based on a manufacturing defect or breach of an express warranty." (Former § 1714.45, subd. (b), Stats.1987, ch. 1498, § 3, p. 5779.)⁴ Therefore, the immunity conferred by the Immunity Statute does not cover liability for manufacturing defects in tobacco products or for a tobacco company's breach of an express warranty, but otherwise it appears in general to cover all liability for injury or death caused by tobacco products.

Additional limitations on the scope of the immunity may be deduced from the history and purpose of the Immunity Statute, which we examined in detail in Richards v. Owens-Illinois, Inc. (1997) 14 Cal.4th 985, 60 Cal.Rptr.2d 103, 928 P.2d 1181 (Richards), a unanimous decision. The statute's express premise, we said, was "that suppliers of certain products which are `inherently unsafe,' but which the public wishes to have available despite awareness of their dangers, should not be responsible in tort for resulting harm to those who voluntarily consumed the products despite such knowledge." (Id. at p. 1002, 60 Cal.Rptr.2d 103, 928 P.2d 1181.) We described the Immunity Statute as based on the principle that "if a product is pure and unadulterated, its inherent or unavoidable danger, commonly known to the community which consumes it anyway, does not expose the seller to liability for resulting harm to a voluntary user." (Id. at p. 999, 60 Cal.Rptr.2d 103, 928 P.2d 1181, italics omitted.) Thus, as applied to tobacco products, the Immunity Statute was intended to protect tobacco companies from liability for their conduct as manufacturers and sellers of products containing tobacco that is pure and unadulterated, when the claim seeks damages for personal injuries or death resulting from dangers or risks that are commonly known to be inherent in tobacco products.

We now apply this understanding of the purpose and scope of the Immunity Statute to the allegations of plaintiffs first amended complaint, which seeks damages from defendant tobacco companies for plaintiffs lung cancer, which was diagnosed in October 1996. At that time, plaintiff had smoked cigarettes regularly since 1950. His complaint alleged causes of action for negligence, product liability, and various theories of fraud, based, in part at least, on defendants' conduct in manufacturing and distributing cigarettes during the statutory immunity period.

Plaintiff argues that the Immunity Statute bars only product liability claims and not claims based on fraud. According to plaintiff, a fraud claim is one that challenges the propriety of defendants' conduct, while a product liability claim is one that assails the safety of defendants' products.

The Court of Appeal rejected plaintiffs proposed distinction between fraud and product liability claims as "of no consequence in interpreting [the Immunity Statute], because the Legislature supplied its own expansive definition of ... `product liability' actions." As defined by the Legislature in the Immunity Statute, a product liability action is "any action for injury or death caused by a product, except that the term does not include an action based on a manufacturing defect or breach of an express warranty." (Former § 1714.45, subd. (b).) Relying on that language, the Court of Appeal stated: "The Legislature's plain language compels the conclusion that whether based on allegations or theories of fraud, negligence, or manufacture of an inherently unsafe product, an action in which a plaintiff seeks damages for personal injury or death caused by a tobacco product clearly is a `product liability' action within the meaning of the statute." Thus, the Court of Appeal held, the Immunity Statute bars each of plaintiffs various claims that defendant tobacco companies defrauded the public about the safety of their products and the risks of tobacco use.

We agree with the Court of Appeal that under the Immunity Statute's broad definition of product liability lawsuits, it makes no difference whether a claim seeking damages for "personal...