Smith v. Brown & Williamson Tobacco Corp.

• Decision Date: 02 October 2012
• Docket Number: WD71918
• Parties: LINCOLN SMITH, ET AL., Appellant-Respondent, v. BROWN & WILLIAMSON TOBACCO CORPORATION, Respondent-Appellant.
• Court: Missouri Court of Appeals

LINCOLN SMITH, ET AL., Appellant-Respondent, v. BROWN & WILLIAMSON TOBACCO CORPORATION, Respondent-Appellant.

WD71918

MISSOURI COURT OF APPEALS WESTERN DISTRICT

Opinion filed: October 2, 2012

(Consolidated with WD71919)

APPEAL FROM THE CIRCUIT COURT OF JACKSON COUNTY, MISSOURI

The Honorable Marco A. Roldan, Judge

Before Court En Banc: James E. Welsh, Chief Judge, James M. Smart, Jr., Judge,

Joseph M. Ellis, Judge, Victor C. Howard, Judge, Thomas H. Newton, Judge,

Alok Ahuja, Judge, Mark D. Pfeiffer, Judge, Karen King Mitchell, Judge,

Cynthia L. Martin, Judge, Gary D. Witt, Judge, and Jacqueline Cook, Special Judge

The survivors of Barbara Smith ("the Smiths") appeal from a judgment, entered following remand from this Court for retrial solely on the issue of punitive damages,¹finding Brown & Williamson Tobacco Corporation (B&W) liable for punitive damages and awarding the Smiths $1,500,000. B&W cross-appeals contending that the Smiths failed to make a submissible case for punitive damages. Because the trial court exceeded the scope of this Court's mandate on remand, the cause must be reversed and remanded for retrial limited solely to the amount of punitive damages to be awarded to the Smiths.

Mrs. Smith was born on May 13, 1927. In 1944, Mrs. Smith began smoking Kool cigarettes, which were manufactured by B&W. In the early 1980s, Mrs. Smith developed angina. In 1990, a physician informed Mrs. Smith that she had "respiratory trouble" that was the beginning stage of emphysema. After the doctor told her that she was "going to have to quit smoking because it was going to kill her if she didn't," Mrs. Smith quit smoking within the year. Mrs. Smith was diagnosed with lung cancer in 1992. Part of one lung was removed, and Mrs. Smith was apparently cancer free thereafter. On May 12, 2000, Mrs. Smith died from a heart attack at age 73.

In March 2003, Mrs. Smith's survivors filed suit against B&W in Jackson County under the Missouri Wrongful Death Act, § 537.080. They asserted claims for negligent design, negligent failure to warn, strict liability product defect, fraudulent concealment, and conspiracy.

Because the Smiths sought an award of punitive damages, trial was bifurcated pursuant to § 510.263. In the first phase of trial, the jury returned a verdict for B&W onthe fraudulent concealment and conspiracy claims but returned a verdict in favor of the Smiths on the negligent design, negligent failure to warn, and strict liability product defect claims, awarding $2 million in compensatory damages. The jury further found that Ms. Smith was 75% at fault; accordingly, the trial court reduced the compensatory damages to $500,000. In the second phase of trial, the jury found that B&W was liable for "aggravating circumstances" and assessed $20 million in punitive damages. B&W timely appealed from that judgment.

On appeal, this Court affirmed the compensatory damages awarded against B&W on the plaintiffs' claims for negligent design, negligent failure to warn, and strict product liability. However, we held that, of the three claims upon which the jury returned a verdict in favor of the Smiths, a submissible case for punitive damages was only made on the strict liability product defect claim. Smith v. Brown & Williamson Tobacco Corp., 275 S.W.3d 748, 823 (Mo. App. W.D. 2008). Because the verdict did not reflect what portion of the punitive damages were related to that claim, we reversed the $20 million punitive damages award against B&W and remanded the case for a new jury trial "on the punitive damages as to the strict liability product defect claim only." Id.

On remand, the trial court determined that the issue of punitive damages on the strict liability product defect claim would again be bifurcated. In the first phase, the jury was to determine if punitive damages were warranted on that claim and, if so, in the second phase, they would assess the amount of the award. The trial court ruled that the evidence in the first phase of trial would be limited to that presented in the first trial but that new evidence could be presented during the second phase of trial.

The case was tried, and in the first phase, the jury found B&W liable for punitive damages on the strict liability product defect claim. During the second phase, B&W presented evidence that any punitive damages award would actually be paid by R.J. Reynolds Tobacco Company, which had acquired the right to manufacture Kools subsequent to the filing of the suit, and argued that R.J. Reynolds did not deserve to be punished with punitive damages. Following the second phase, the jury returned a verdict awarding the Smiths $1.5 million in punitive damages. The Smiths appeal from that judgment, and B&W cross-appeals.

We initially address B&W's claims on cross-appeal, both of which challenge the trial court's denial of its motion for judgment notwithstanding the verdict. When reviewing a trial court's denial of JNOV, "[t]his Court must determine whether the plaintiff presented a submissible case by offering evidence to support every element necessary for liability." Fleshner v. Pepose Vision Institute, P.C., 304 S.W.3d 81, 95 (Mo. banc 2010). "Evidence is viewed in the light most favorable to the jury's verdict, giving the plaintiff all reasonable inferences and disregarding all conflicting evidence and inferences." Id. We "will reverse the jury's verdict for insufficient evidence only where there is a complete absence of probative fact to support the jury's conclusion." Dhyne v. State Farm Fire & Cas. Co., 188 S.W.3d 454, 457 (Mo. banc 2006).

In its first point on cross appeal, B&W contends that the trial court erred in failing to grant JNOV because the Smiths failed to make a submissible case for punitive damages for strict liability product defect. B&W claims that the Smiths failed to presentclear and convincing evidence of aggravating circumstances related to the conduct for which the jury in the original trial found B&W liable on that count.²

"A submissible case [for punitive damages] is made if the evidence and the inferences drawn therefrom are sufficient to permit a reasonable juror to conclude that the plaintiff established with convincing clarity - that is, that it was highly probable - that the defendant's conduct was outrageous because of evil motive or reckless indifference." Smith, 275 S.W.3d at 811. Specific to their claim for punitive damages on their strict liability product defect claim, the Smiths had to present clear and convincing evidence that B&W "placed in commerce an unreasonably dangerous product with actual knowledge of the product's defect." Id. at 812 (internal quotation omitted).

In the appeal from the first trial, this Court examined the evidence "to determine whether, as a matter of law, it was sufficient to submit the claim for punitive damages." Id. at 811. We held that the evidence presented at the first trial was sufficient to support a punitive damages award on the strict liability product defect claim. Id. at 823. Accordingly, there was "sufficient evidence of conduct tantamount to intentional wrongdoing to submit the issue [of punitive damages] to the jury." Id.

B&W has failed to indicate how the evidence presented in the first phase of the trial on remand differed significantly from that presented in the original trial, and weperceive of no significant differences in the evidence. Indeed, on remand, the trial court limited the evidence presented in the first phase of the second trial to evidence that had been presented in the previous trial, and the evidence admitted at trial was almost identical to the first trial. In both trials, Dr. David Burns and Dr. Jeffrey Wigand testified extensively about the defects and dangers inherent in Kool cigarettes.

Dr. Burns testified about Brown's knowledge and conduct regarding the design, manufacture, advertising, and public position it took on the denial that its cigarettes are addictive or cause disease. He explained to the jury that B&W's knowledge of the dangerous and addictive qualities of its cigarettes and its conduct in light of that knowledge was "one of the largest public health frauds that occurred in the last half century." Dr. Burns stated that B&W's conduct:

is a very clear example of a tobacco company attempting to sell its product to someone who is already sick, and that product is going to add further harm to that individual who is already sick. So it's a conscious and deliberate effort to increase profits at the expense and injury of the individual who responds to this message.

Dr. Wigand testified that, while he worked at B&W, the company president's favorite saying was "hook'em young, hook'em for life" in reference to nicotine addiction. Dr. Wigand stated that he was trained by B&W not to write anything down that could be potentially used in litigation and that an attorney followed him around so that his conversations could be considered privileged. He said that minutes from meetings were changed to remove any information harmful to B&W's interests.

Drs. Burns and Wigand both described the distinctive characteristics of Kool cigarettes, including a high level of nicotine combined with menthol to ameliorate theharshness so that the smoker would be more likely to breathe deeply. Both stated unequivocally that Kool cigarettes, specifically, are defective and unreasonably dangerous. The fact that the doctors made isolated statements in their testimony suggesting that all cigarettes are inherently dangerous and defective does not negate the effect of their Kool-specific testimony.

And, as was the case in the first trial, there was

sufficient evidence of conduct tantamount to intentional wrongdoing to submit the issue to the jury. In the light most favorable to submissibility, [B&W] had an active process of creating controversy regarding the health risks of smoking and planned to dispute every Surgeon General's report, regardless of what it was based upon. Further, [B&W] had policies of

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