American Journal of Law & Medicine

Tobacco litigation: smoke, mirrors and public policy.

I. INTRODUCTION

My experience and reflections concerning tobacco litigation stem from representing the American Cancer Society in November of 1998,(1) when the State of Oregon asked Judge Anna Brown of the Circuit Court of Multnomah County in Portland to approve the settlement agreement reached between Oregon and the major tobacco manufacturers.(2) The American Cancer Society intervened in opposition.(3) The agreement was a part of a multi-state settlement reached by forty-six state Attorneys Generals and the tobacco industry proposed to state courts during that same week and the ensuing weeks around the country. By October of 1999,(4) the Master-Settlement Agreement (MSA) was approved by enough states that it was effectuated.(5) Distributions pursuant to the agreement will begin in 2000 or 2001.(6) Total disbursements over twenty years will exceed $240 billion, a huge amount of money by anyone's standards.(7)

The position advanced in opposition had basically four points: (1) the State was getting far too little; (2) it was giving up far too much; (3) the structured nature of the settlement meant that the State's future interests were aligned with, indeed dependent upon, future success in tobacco sales, an exact reversal of existing health policy; and (4) the kinds of determinations underlying the MSA were essentially legislative, and well beyond the adjudicative and enforcement capabilities of a single judge sitting in a lower court of general jurisdiction. All four of these points will be developed later,(8) but the crucial point is the last: litigation is simply not an appropriate vehicle for setting health care policy within a state or across a nation. And yet, on several different fronts, litigation is the means by which we are setting that policy(9) as it affects tobacco consumption, quite possibly the nation's leading health concern. Whether a comprehensive tobacco policy is possible may be in doubt; that it is disserved by litigation seems certain.

The MSA was the result of nearly two years of litigation brought by forty-six state Attorneys General in what were called the "Medicaid" cases, wherein the states sued the tobacco companies for the health care injury inflicted by tobacco consumption.(10) The potential impact of these suits on public health and industry was huge.(11) But two other forms of litigation--private and federal--exist as well, and are potentially far more significant.

For the past forty years, private individuals have brought private tort actions against tobacco companies, seeking redress for injuries such as cancer and death.(12) Part II of this article examines these suits. Recently, this litigation has begun to show marked success. However, by its nature, private litigation does not adequately address public health concerns, and therefore will not create a comprehensive national tobacco policy. Part III discusses the State Medicaid actions in depth. These suits brought new legal theories, strong litigation resources and involved entities representing the public interest. However, the result of this litigation, the MSA, is far from satisfactory in addressing the wrongs committed by the tobacco industry and in providing sensible public health policy. Part IV examines the recent lawsuit by United States Attorney General, Janet Reno, against the tobacco companies.(13) This action is based upon two federal statutes permitting the federal government to recover expenses resulting from tortious misconduct, including Medicare or veterans' benefits paid due to tobacco-related disease and death. Legal weakness in the government's case and tremendous political pressures will likely lead the government to settle on terms favorable to the industry.

Altogether, these three areas of litigation--the state Medicaid litigation, the private litigation and the newly filed federal litigation--pose a real probability of extracting hundreds of billions of dollars from the tobacco industry, with the potential for changing its behavior, as well as compensating its victims. It seems clear, however, that the tobacco industry will survive and that its products will continue to inflict the injury they have inflicted over the past seventy-five years. Moreover, if the MSA is any indication, the tobacco industry will incorporate the probable settlements from the private and federal litigation into its costs of doing business.(14) These added expenses will likely be passed on to an addicted consumer base. The tobacco industry will thereby self-insure against the injuries it inflicts and continue its course of destructive conduct. There will be no genuine improvement in the nation's health. Nor will there be a comprehensive national policy concerning tobacco.

Indeed, part of the companies' motive in gathering the States into a single settlement may have been precisely to avoid a comprehensive resolution of health issues. The essence of litigation in our system focuses entirely on the case and controversy between the individual litigants and limits the resolution to their particularized grievances. Tobacco litigation is no different.

What is different about tobacco litigation, however, is that the potential claimants are so numerous, the scope of the offending conduct so vast and the resources of the defendants so huge, that conventional litigation is simply inadequate to capture and contain the issues or assure appropriate relief. It thus fails both as a policy and a compensatory vehicle. In truth, tobacco litigation is poised midway between the destruction of a nation's health, on the one hand, and the destruction of a major industry, on the other. These are matters of legislative, not adjudicative, dimensions.(15)

To return to the state of Oregon for a moment, there simply was no way that Judge Anna Brown could possibly police the misconduct or noncompliance of the tobacco companies in the agreement she approved. She--and the parties before her--lacked the resources even to litigate the cases before her, let alone evaluate the fairness of the MSA or the alternatives to it. There were no resources, there were no personnel for that task and no one appeared in opposition, in the public interest.(16) Of equal importance, the same is true for private litigation around the country and it may well prove true for the litigation filed by the Department of Justice.

It may help to set tobacco litigation in an historical perspective. The MSA stemmed from the tobacco companies failure to obtain a global settlement(17) from Congress in 1997 and 1998 on the order of $520 billion or more of all outstanding claims. Instead, the tobacco companies sought the same benefits by settling the state Medicaid claims at approximately $250 billion. The newly filed federal claim may be expected to settle somewhere in the range of $200 to $300 billion. This means that by inviting and settling litigation, the tobacco companies will have obtained what Congress denied legislatively. That leaves only the individual litigation, which the tobacco companies will seek to counter by individual settlements, coupled with legislative lobbying in the fifty state capitals, a technique for reducing liability which has proven successful for other industries, such as asbestos and insurance.(18)

Perhaps this is unduly cynical, but without a better vehicle than litigation to set health care policy, the smart money should be on the survival and continued prosperity of the tobacco companies. This reality underscores another enduring reality: this nation needs a legislatively grounded, comprehensive health care policy for dealing with tobacco production and consumption.

II. PRIVATE TOBACCO LITIGATION

From 1954 to 1994, a period of some forty years, approximately 813 claims were filed by private citizens in tort actions in state courts against tobacco companies.(19) Only twice did courts find in favor of the plaintiffs, and both of these decisions were substantively reversed on appeal.(20) The tobacco companies could quite honestly and proudly assert that they had never been found guilty of wrongdoing.(21)

One of these cases, Cipollone v. Liggett, went to the U.S. Supreme Court.(22) The Court of Appeals record(23) and the U.S. Supreme Court opinion(24) both thoroughly develop and explore the conduct and misconduct of the tobacco companies, as alleged by the 813 plaintiffs. Those unfamiliar with that conduct will find the record appalling. As a teenager in the late 1930s and early 1940s, Rose Cipollone began smoking. As the decades unfolded, she shifted her smoking patterns in response to tobacco company advertising, towards what were claimed "safer" products. At all times, it is clear, she knew there was danger in smoking and she pursued smoking because of its addictive and socially engaging qualities. The record of merchandising that unfolds in the Cipollone case is one of arrant duplicity and crass misrepresentation.

The Supreme Court's ultimate holding, that plaintiffs could proceed in state court to seek tort relief despite a 1964 federal statute which required warnings on cigarette packages in return for federal preemption of any litigation based upon false advertising(25) was a partial victory against the tobacco industry. The Supreme Court held, quite ambiguously, that underlying tort actions related to product liability and fraud survived the preemption of the federal statute.(26) On remand, however, the case was settled, to join the other hundreds of failed challenges to Big Tobacco.

Why, then, were these plaintiffs unsuccessful? The private litigants made a predictable array of claims: negligent manufacture and advertising; delivery of a product that was inherently dangerous or otherwise defective; deliberate fraud and misrepresentation; and violation of state consumer protection statutes. …

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