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Cigarette makers lose appeal on 4,000 Florida suits


ATLANTA (Bloomberg)—Altria Group Inc.'s Philip Morris USA unit and other U.S. cigarette makers lost an appeal affecting about 4,000 Florida smoker suits in federal court.

A federal appeals court in Atlanta on Friday denied the companies' request to block lower courts from applying a 2006 Florida Supreme Court decision they claimed deprived them of fair trials in death and injury suits filed in the state.

The companies said that a series of factual conclusions endorsed by Florida's highest court in the 2006 Engle decision can't fairly be used against them in individual smokers' trials. The findings included those that cigarette makers conspired to hide information on smoking's health effects and that they made false statements about their products.

The federal appeals court reversed a district court's pretrial ruling and said the findings “must be given the same preclusive effect in this federal court case that they would be given if the case were in state court.”

While the ruling limits how the findings can be used, it permits the federal cases, which were on hold, to go forward.

“We're delighted,” said Samuel Issacharoff, who argued the appeal on behalf of the smokers. The ruling reaffirmed that plaintiffs in federal court will get the benefit of the Engle findings, he said.

The court also said that, because the Engle findings were so general, the individual smokers may have difficulty applying them to the facts in their cases. The companies argued that smokers were trying to apply the findings too broadly to avoid having to prove their cases.

‘Considerable task'

“We are pleased that the appellate court has rejected arguments by plaintiffs that they have an automatic and unlimited right to use the findings,” said Murray Garnick, Altria Client Services senior vp and associate general counsel. “In the court's own words, plaintiffs have a ‘considerable task' to show with ‘reasonable certainty' that the facts they want to establish were ‘actually decided' by the prior jury.”

Besides the 4,000 cases that were filed or transferred to federal courts in Florida, another 4,000 are pending in state courts. Friday's ruling, which doesn't formally affect any of the state court cases, may be considered by judges hearing smokers' claims in Florida courts.

Plaintiffs winning

Plaintiffs have won 18 of 21 cases tried in Florida state courts. In many of those cases, judges simply read the Engle findings to jurors and told them they were binding. Cigarette makers are appealing the state-court verdicts against them, claiming the judges' improper instructions are responsible for the companies' losing record in so-called “Engle progeny” cases.

“None of the plaintiffs who have obtained verdicts in state court have complied with the requirements set forth by today's rulings,” Philip Morris said in its statement.

The appeals court today declined to decide whether applying the Engle findings would violate the companies' constitutional due process rights.

Florida law

The court said that district courts will have to apply Florida law and decide what facts in the plaintiffs’ cases are established by the Engle findings.

“The district court’s ruling that ‘the findings may not be given preclusive effect in any proceeding to establish any element of an Engle plaintiff’s claim,’ cannot stand, at least not at this time,” the court said in its ruling Friday.

“We’re actually really pleased with this,” said Stephanie Parker, a lawyer for Reynolds American Inc.’s R.J. Reynolds Tobacco unit. “We hope the state courts will follow the logic in this opinion.”

Ed Sweda, senior staff attorney with the Tobacco Products Liability Project, an anti-tobacco group, said his organization is glad that the appeals court didn’t agree with the lower court that the Engle findings must be excluded.

The Engle case is named after a Florida pediatrician named Howard Engle who was the lead plaintiff in a statewide class action filed in 1994 on behalf of smokers who were addicted to nicotine and developed cancer or other smoking-related illnesses as a result.

In the first part of what was intended to be a three-phase trial, a Miami jury decided a series of common questions relating to the companies’ conduct and to the health effects of smoking. In the second phase, the jury awarded $145 billion in punitive damages to the class.

In 2006, the Florida Supreme Court rejected the $145 billion verdict and ruled that the case couldn’t continue as a class action.

At the same time, Florida’s high court upheld most of the Phase I factual findings and said they would apply in all of the individual suits filed by smokers who had been part of the Engle class. The U.S. Supreme Court declined to review the case.

The case is Brown vs. R.J. Reynolds Tobacco Co., No. 08- 16158, 11th U.S. Circuit Court of Appeals (Atlanta).

Copyright 2010 Bloomberg