[Drug and Device Law] Fraud In The Smoke Will Not Do
This is from the non-Dechert side of the blog.
We do not write too often about tobacco decisions. While FDA has added a Center for Tobacco Products and there are still lots of cases against tobacco manufacturers, we are more likely to talk about some consumer protection or preemption issue from a food case than any issue from a tobacco case. Rather than discussing the reasons why we typically ignore the tobacco cases in our nearly never-ending search for bloggable cases, we will say what interested us in Berger v. Philip Morris USA, Inc., No. 3:09-cv-141567 (M.D. Fla. Apr. 23, 2015). First, the decision is a grant of a post-trial motion for partial judgment after essentially the same motion was denied without prejudice at the end of the plaintiff’s case. For readers who have not gone through this particular emotional roller coaster, it can be analogized to watching your playoff basketball or hockey team be up three games to two, fail to clinch the series in game six, and then take game seven. You were sure that your team would lose game seven after the earlier missed opportunity. Then, your relief at the ultimate win is somewhat tempered by the thought that you could have avoided significant progress toward an ulcer. Still, this is much better than taking the loss. Ask any Caps fan. Second, it involved a verdict of more than $20 million going away. And, third, it involved the issue of the plaintiff’s reliance on representations by the defendant—representations that the court had no trouble characterizing in the most damning ways. Going back to the basic principles of tort law—Palsgraf, anyone?—even decades of an industry-wide “disinformation campaign” does not create liability unless it can be tied to the plaintiff’s use of the product. The last time we chimed in on the so-called Engle-progeny cases, it was to address rampant fraud by plaintiff lawyers in bringing frivolous lawsuits like personal injury cases for dead people, survivorship actions for living people, and suits for people they did not represent. Apparently, among the progeny, there are real cases on behalf of living people with tobacco-related injuries and, apparently, they proceed on claims for fraud and conspiracy to commit fraud. In the context of personal injury claims for drugs and devices, we mostly see fraud and conspiracy claims added in to complaints as a proposed route to punitive damages with little chance the actual evidence with bear out the allegations of the defendant’s conduct. The Engle-progeny cases, at least as the Berger court recounts the trial evidence, are a different animal. The industry—most of the general evidence is presented as a coordinated effort of the entire industry—“deliberately targeted persons of school and college age to begin smoking, knowing that, as a result of the addictive powers of their product, and the oft irresistible influence of peer pressure on pupils and students, they would acquire new, life-long consumers of their products,” which the industry already knew to be deadly. The “massive, multi-faceted, protracted, and effective disinformation campaign” about the risks and addictive potential of cigarettes included downplaying the 1964 Surgeon General’s Report, lying to Congress, and claiming that “light” cigarettes and/or cigarettes with filters were safer. Even with a mountain of bad evidence, plaintiff still “had to prove that she relied on what the tobacco companies were saying and doing, by both affirmation and concealment, as she began and/or continued to smoke.” Even though plaintiff began smoking in 1960, later switched to filtered Parliament Lights, was generally aware of Philip Morris’s advertising, and later developed COPD, her detrimental reliance was not a foregone conclusion.
It was one that plaintiff contended, based on intermediate Florida appellate authority, could be presumed based solely on generic evidence. The Berger court, consistent with its jury instruction, rejected that contention both because federal standards for sufficiency of evidence apply in federal courts sitting in diversity and because the court predicted that the Florida Supreme Court would not adopt such a presumption. We have been critical of other courts for blithely extending state law against Erie principles, but the court here took a reasoned approach in refusing the proposed deviation from traditional proof requirements—something we would characterize as a proposed extension of state law. The Florida Supreme Court authority emphasized that the whole point of Engle-progeny cases was to allow trials of “matters individual to each claimant individually,” including “individual questions of reliance and legal cause.” Despite the intermediate appellate decisions, the court was “persuaded that the Court would opt for requiring some proof of individual reliance on the tobacco companies’ fraudulent misconduct.” Thus, although there was some expert testimony that skirted the subject of whether the plaintiff relied on anything from the defendant or industry, plaintiff’s “claim of reliance rises or falls on her own testimony.” That testimony was “remarkably candid and forthright” in attributing her decisions to start smoking cigarettes, keep smoking after warnings were added to cigarette packaging, and switch to a “light” filtered brand to things other than the defendant’s representations. According to the definition of reliance imported from the Restatement (2d) of Torts, reliance on the truth of a misrepresentation “must be a substantial factor in inducing [the plaintiff] to act or refrain from action.” By her own testimony, plaintiff decided to smoke based on peer pressure. She switched to a new brand because of how it tasted and kept bits of tobacco out of her mouth, not based on a belief that it was safer than other brands. She “kind of knew” that smoking was hazardous after warnings came out, “but I didn’t take it seriously enough. I knew a lot of people that smoked and they were in their 90s.” Without more, and even with reasonable inferences in her favor:
the evidence offered here simply cannot support a reasonable fair-minded inference of her detrimental reliance on either incomplete representations by PMUSA regarding the health effects and/or addictive nature of smoking cigarettes, or, on statement(s) made or act(s) done in furtherance of a conspiracy to conceal or omit material information from representations regarding the same.
With this, the fraud and conspiracy claims and the $20 million punitive award based on them were reversed. Glossing over the procedural details for the rest of the case, we will end with the dual lessons that the nexus between generic evidence and case-specific evidence should always matter and honest plaintiffs sometimes submarine their own cases.--
Posted By Eric Alexander to Drug and Device Law at 4/29/2015 08:00:00 AM --
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