Philip Morris USA, Inc. v. Hess

• Decision Date: 14 September 2012
• Docket Number: No. 4D09–2666.,4D09–2666.
• Citation: 95 So.3d 254
• Parties: PHILIP MORRIS USA, INC., Appellant, v. Elaine HESS, as Personal Representative of the Estate of Stuart Hess, deceased, Appellee.
• Court: Florida District Court of Appeals

95 So.3d 254

PHILIP MORRIS USA, INC., Appellant,

v.Elaine HESS, as Personal Representative of the Estate of Stuart Hess, deceased, Appellee.

No. 4D09–2666.

District Court of Appeal of Florida, Fourth District.

May 2, 2012.

Rehearing Denied Sept. 14, 2012.

Miguel A. Estrada of the Law Firm of Gibson, Dunn & Crutcher LLP, Washington, D.C., Patricia A. Melville, Andrew S. Brenner and Luis E. Suarez of Boies Schiller & Flexner LLP, Miami, and Gary L. Sasso of Carlton Fields, Tampa, for appellant.

Bruce S. Rogow, Cynthia E. Gunther of Bruce S. Rogow, P.A., Fort Lauderdale, Gary M. Paige and Adam Trop of Paige, Trop & Ameen, P.A., Hollywood, and

Alex Alvarez of The Alvarez Law Firm, Coral Gables, for appellee.

DAMOORGIAN, J.

Philip Morris USA, Inc. (“PM USA”) appeals the trial court's final judgment entered in favor of Elaine Hess, as surviving spouse and personal representative of the estate of her deceased husband, Stuart Hess. PM USA raises three issues on appeal. First, it contends that the trial court erred in denying its motion for judgment as a matter of law on the fraudulent concealment claim because it was barred by the statute of repose. Next, it argues that the trial court misapplied the Engle¹ findings. Lastly, it submits that the trial court erred in denying its motion to remit the punitive damages award because it was excessive under federal and Florida law. Mrs. Hess cross appeals the trial court's final judgment to the extent it reduced the compensatory damages award based on the comparative fault of the decedent Mr. Hess. She argues that the substance of her action was the intentional tort of fraudulent concealment, precluding application of the comparative fault statute. See§ 768.81(3)- (4), Fla. Stat. (1993). We affirm with respect to the application of the Engle findings. We reverse the denial of PM USA's motion for judgment as a matter of law on the fraudulent concealment claim, upon which the punitive damages award was based. Because we reverse for entry of judgment in PM USA's favor on the fraudulent concealment claim, PM USA's argument on appeal regarding the denial of its motion for remittitur is rendered moot as is Mrs. Hess's issue on cross appeal regarding the trial court's reduction of the compensatory damages award.²

The instant case commenced as one of the Engle progeny cases. See Engle v. Liggett Group, Inc., 945 So.2d 1246 (Fla.2006). By way of background, Mrs. Hess filed a complaint against PM USA for strict liability, negligence, conspiracy to commit fraud, and fraudulent concealment, seeking to recover damages for the death of her husband, a longtime smoker.³ The complaint admitted that Mr. Hess bore some measure of fault for his smoking-related injuries and death.

The case proceeded to trial in two phases and in the manner we approved in R.J. Reynolds Tobacco Co. v. Brown, 70 So.3d 707 (Fla. 4th DCA 2011). Id. at 714. In the first phase, the jury was required to determine whether Mr. Hess was a member of the Engle class, i.e. whether he was addicted to PM USA's cigarettes, and, if so, was his addiction a legal cause of his death. Mrs. Hess presented substantial evidence of Mr. Hess's smoking history and medical background, as well as expert testimony regarding his addiction in this phase. Testimony also indicated that Mr. Hess's cigarette of choice was PM USA's Benson & Hedges brand.⁴ Furthermore, she presented evidence regarding the tobacco companies' strategy to conceal the addictive nature of nicotine from smokers. Pursuant to the parties' stipulations, the jury was instructed that (i) cigarettes containing nicotine are addictive; (ii) smoking cigarettes causes lung cancer; (iii) Mr. Hess's lung cancer was caused by PM USA's cigarettes containing nicotine; and (iv) Mr. Hess died of lung cancer. At the conclusion of this phase, the jury found that Mr. Hess was addicted to cigarettes containing nicotine, and his addiction was the legal cause of his death.

In the second phase of trial, limited testimony was presented to the jury from Mrs. Hess and her son, David Hess, regarding Mr. Hess's exposure to cigarette advertising, his knowledge of the health risks posed by smoking, and the emotional loss they suffered as a result of Mr. Hess's death in 1997 at the age of 55. At the conclusion of evidence in this phase, the trial court instructed the jury that the strict liability, negligence, and fraudulent concealment Engle findings were binding on it.⁵ It also explained to the jury that the complaint had admitted Mr. Hess bore some measure of responsibility and instructed that his behavior was “a concurring legal cause in combination with acts or omissions of Philip Morris USA of his smoking related injuries and death.” The trial court also instructed:

The conduct of Stuart Hess and Philip Morris USA may be considered a legal cause if it directly and in natural and in continuance (sic) sequence produces or contributes substantially to producing the loss so that it can reasonably be said that but for that conduct, the loss would not have occurred. Accordingly, you must assign some percentage of responsibility on your verdict form to Mr. Hess.

In regard to the fraudulent concealment claim, the trial court instructed the jury:

You must determine whether Stuart Hess relied to his detriment on any statements made by Philip Morris USA that omitted material information. If the greater weight of the evidence does not support the Plaintiff's claim on this issue, then your verdict should be for the Defendant on this claim.

Relating to that claim, Stuart Hess' reliance to his detriment on any statements by Philip Morris USA that omitted material information is a legal cause of loss if it directly and in natural and continuance (sic) sequence produces or contributes substantially to producing such loss so that it can reasonably be said that but for Stuart Hess' reliance, the loss would not have occurred.

In order to be regarded as a legal cause of loss, Stuart Hess' reliance on omitted statements to his detriment need not be the only cause. Stuart Hess' reliance on omitted statements to his detriment may be a legal cause of loss ... even though it operates in combination with the act of another, some natural cause or some other cause.

The verdict form in this second phase directed the jury as follows:

By answering the following questions, you will determine the damages that ELAINE HESS and DAVID HESS sustained as a result of the incident in question. In determining the amount of damages, do not make any reduction because of the fault of the parties. The Court, in entering judgment, will make an appropriate reduction of the damages awarded.

It then asked the jury to (i) state the percentage of responsibility it charged to PM USA and Stuart Hess; (ii) state the amount of damages sustained by Mrs. Hess due to pain and suffering and the loss of her husband's companionship and protection; (iii) state the amount of damages sustained by David Hess due to pain and suffering and the loss of parental companionship, instruction and guidance; (iv) determine whether Mr. Hess had relied to his detriment on any statement by PM USA omitting material information, which caused or contributed to his injury and death; (v) choose the time period during which he relied on such; (vi) determine whether punitive damages were warranted against PM USA by clear and convincing evidence; and (vii) if punitive damages were warranted, to assign a total amount. It did not ask the jury to return findings on any other element of Mrs. Hess's claims.

The jury returned a verdict of $3 million in compensatory damages, presumably on all three claims. It determined Mr. Hess was 58% responsible and PM USA was 42% responsible. It also found Mr. Hess had relied on PM USA's statements only before May 5, 1982, and found punitive damages were warranted on the fraud by concealment claim in the amount of $5 million. Before entering its final judgment, the trial court sua sponte reduced the compensatory damage award to $1.26 million based on the comparative fault assigned to Mr. Hess.

PM USA moved for judgment as a matter of law on the fraudulent concealment claim, upon which the punitive damages award was based. It argued that in light of the jury's finding that PM USA did not defraud Mr. Hess within the twelve years prior to the filing of the Engle complaint, the fraudulent concealment claim and the punitive damages award were barred by the statute of repose. Without explanation, the trial court denied the motion. It also denied PM USA's motion to remit the punitive damages award. This appeal and cross-appeal follows.

We first address PM USA's issue with the trial court's application of the Engle findings. We reject PM USA's various arguments regarding the application of the findings. This Court recently addressed the scope of application of the Engle findings in the Engle progeny cases. See Brown, 70 So.3d at 717–18. In Brown, we stated that “the Engle findings preclusively establish the conduct elements” of claims brought in a post- Engle action. Id. at 715. Therefore, despite PM USA's urging, plaintiffs are not required to relitigate these elements. See id. at 717, 718. However, we further recognized that establishing membership in the Engle class does not satisfy a plaintiff's burden of proving legal causation on individual claims. Id. at 715. With respect to the strict liability and negligence claims, we concluded in Brown that the trial court properly instructed the jury on legal causation and submitted the relevant questions to the jury. Id. As such, we affirmed the final judgment because there was no error in the trial court's application of the Engle findings. Id. at 718.

To find that Mr. Hess was a member of the Engle class, the jury was required to find that his addiction to cigarettes containing nicotine was a legal cause of his death. However, unlike Brown, the jury was not instructed on legal causation as it...