by J. B. Harris
On December 21, 2006, the Florida Supreme Court published what may be the most important opinion in the history of Florida products liability litigation.1 Known as the Engle III decision,2 the court upheld a jury’s unprecedented findings that cigarettes containing nicotine are addictive and that smoking causes a host of diseases, from aortic aneurysm to lung cancer. The court also upheld the jury’s findings that cigarette manufacturers 1) placed on the market cigarettes that were defective and unreasonably dangerous; 2) concealed or omitted material information not otherwise known or available to the public, knowing that the material was false or misleading, or failed to disclose facts concerning the health effects or addictive nature of smoking cigarettes; 3) conspired to conceal or omit information regarding the health effects of cigarettes, or their addictive nature with the intention that smokers and the public would rely on this information to their detriment; 4) sold or supplied cigarettes that were defective; 5) sold or supplied cigarettes that did not conform to representations of fact made by the cigarette makers; and 6) acted negligently.3
Engle III was the culmination of 12 years of litigation that began in May 1994. It was then that a group of plaintiffs filed a first of its kind class action lawsuit against the major cigarette producers, embarking on an epic journey that would forever change the course of products liability litigation against the tobacco industry. Engle’s legacy continues to this day in the form of more than 8,000 individual “progeny” cases filed by plaintiffs in both state and federal courts in Florida,4 following the Engle court’s decision to decertify the class. This article examines Engle’s historical underpinnings, its impact on the rights of qualified smokers to recover damages against the cigarette makers, and the judicial system’s efforts to handle thousands of individual claims now making their way through the courts under the Engle regime.
The historical context in which this journey began coincided, in part, with a shift in the way Americans came to view the health effects of smoking. By the early 1990s, smoking was no longer seen as cool, sexy, sophisticated, or chic. Instead, following a series of U.S. Surgeon General’s reports detailing the links between smoking and cancer, the public began to see smoking as dirty, deadly, and addictive, and as far as the states were concerned, an expensive drain on limited health care resources.5 As a result, a majority of states’ attorneys general banded together to sue the cigarette manufacturers for, among other things, fraud, conspiracy and the sale of a defective and addictive product, asserting punitive damages in the process.6 They did so to recover Medicaid and other public expenditures associated with treating individuals suffering from smoking-related illnesses, costs that collectively ran into the billions of dollars annually.
Throughout this litigation, and thereafter as part of a nationwide Master Settlement Agreement, a flood of incriminating evidence, including secret industry documents, poured from the cigarette companies’ files, implicating the industry in a conspiracy to perpetrate perhaps the largest consumer fraud in U.S. history. This evidence proved that cigarette manufacturers had engaged in a decades-long scheme to conceal from the public the dangers of smoking, even in the face of mounting scientific proof demonstrating the causal connection between smoking and numerous illnesses like cancer and heart disease.7
Driven by a realization that the cigarette is “the deadliest artifact in the history of human civilization”8 — approximately 20 million Americans died from smoking between the 1930s to the 1990s, more than all Americans killed in all U.S. wars combined9 — Miami attorneys Stanley and Susan Rosenblatt filed a nationwide class action suit against the major cigarette producers seeking more than $100 billion in compensatory and punitive damages.10
Styled Engle v. Liggett Group, Inc., No. 94-08273-CA-22 (Fla. 11th Cir. Ct. Nov. 6, 2000), rev’d 853 So. 2d 4343 (Fla. 3d DCA 2003), six class representatives alleged that, because they were addicted to cigarettes, they had developed a variety of medical conditions ranging from lung cancer to heart disease.11 They also claimed to be the victims of intentional infliction of emotional distress, and fraud carried out by the cigarette companies aimed at concealing from the public the dangers of smoking. Based on these allegations, the trial court certified a nationwide class in October 1994, the first smokers’ class action ever approved in the United States.12 Later the court reduced the class size to only Florida smokers after the Third District in R.J. Reynolds Tobacco Co. v. Engle, 672 So. 2d 39 (Fla. 3d DCA 1996) (Engle I), found that a nationwide group of more than one million smokers was simply unmanageable.13
A Three-phase Trial Plan
After the court narrowed the class to Florida smokers, a three-phase trial began in Miami-Dade Circuit Court in 1996.14 Phase I involved a year-long trial on the issue of general liability, or “common issues” affecting all class members.15 It also entailed determining whether the class as a whole was entitled to punitive damages.16 During the Phase I trial, the jury made the core liability findings referenced above, i.e., that cigarettes containing nicotine are addictive, that smoking causes a variety of deadly illnesses, and that the cigarette industry was negligent and conspired to conceal the dangers of smoking from the public.17 At the conclusion of Phase II, which lasted an additional five months, the jury found three of the six class representatives were entitled to varying amounts of compensatory damages, which were offset by their comparative fault.18
The jury also found the defendants liable to the class for lump-sum punitive damages in the amount of $145 billion, the largest award of its kind in U.S. history.19 Because the jury did not allocate any portion of this amount to class members individually, the trial court devised a Phase III trial plan, under which new juries would decide issues of causation, damages, and comparative fault for each individual class member. The court envisioned dividing the overall punitive damages award equally among qualified plaintiffs.20
The Engle II Decision
Before Phase III could begin, however, the defendants again appealed to the Third District, seeking to overturn both class certification and the historic punitive damages award under the Phase II final judgment (Engle II).21 Although the Engle I court had previously certified the class of Florida smokers as part of the interlocutory appeal, the Engle II court relied on the rationale of other jurisdictions to decertify it, holding that class certification of smokers’ cases is “unworkable and improper,” based on the individualized nature of each claim.22 Because the Engle II court considered smokers’ claims “uniquely individualized,” it held “the class could not meet the ‘predominance’ and ‘superiority’ requirements under Florida’s class action rules.”23
The Engle II court then overturned both the lump-sum punitive damages award and the individual compensatory damages awarded to three of the six class representatives. First, the court found the trial court “erred in allowing the jury to determine a lump sum [punitive damages] amount before it determined the amount of total compensatory damages for the class.”24 Doing so was like putting “the cart before the horse.”25 Second, the punitive damages award “violate[d] due process because there [was] no way to evaluate the reasonableness of the punitive damages award without the amount of compensatory damages having been fixed.”26 Third, the court found the “unprecedented” award “excessive” as a matter of law and public policy because it did not “promote a valid societal interest.”27 Finally, the Engle II court overturned the compensatory damages award as to three of the six class representatives, on the basis that the claims of one were barred by the statute of limitations, while the claims of the other two did not accrue until after the class cut-off date.28
Thus, the odd configuration of a trial plan that permitted a jury to award class-wide punitive damages before a finding of liability and compensatory damages as to individual class members, left the Engle II court no alternative but to overturn the punitive damages award.29
The Engle III Decision
Following the decision in Engle II, the plaintiffs appealed to the Florida Supreme Court (Engle III).30 Upon review, the Engle III court first approved the Third District’s ruling overturning the punitive damages award, but did so on other grounds.31 Where the Engle II court found the trial court had erred in awarding punitive damages “‘without the necessary findings of liability and compensatory damages,’”32 one majority of the Engle III court concluded that “an award of compensatory damages is not a prerequisite to a finding of entitlement to punitive damages” because each serves a distinct purpose.33 Compensatory damages are intended to compensate a plaintiff for actual losses, while punitive damages are meant to deter future wrongdoing through monetary punishment.34 In other words, “[b]ecause a finding of entitlement to punitive damages is not dependent on a finding that a plaintiff suffered a specific injury, an award of compensatory damages need not precede a determination of entitlement to punitive damages. [Thus]…the order of these determinations is not critical.”35 Another majority, on the other hand, found that “liability is required before entitlement to punitive damages can be determined, and that liability is more than a breach of duty. A finding of liability necessarily precedes a determination of damages, but does not compel a compensatory award.”36 In sum, the Phase I “jury decided issues related to Tobacco’s conduct but did not consider whether any class members relied on Tobacco’s misrepresentations or were injured by Tobacco’s conduct.”37 Therefore, it was error for the Phase I jury to consider the issue of punitive damages before determining whether the defendants were liable to any of the class plaintiffs in particular. With respect to the lower court’s ruling on compensatory damages, however, the court reinstated the award for two of the three class representatives, but agreed that compensatory damages for the third was barred by the statute of limitations.38
The Engle III court then addressed the issue of punitive damages. First, the court acknowledged that it had never previously ruled on the question of whether the amount of punitive damages must bear some reasonable relationship to the amount of compensatory damages.39 Given the enormity of the punitive damage award rendered by the Phase I jury, however, the Engle III court held due process demands that “a review of the punitive damages award include an evaluation of the punitive and compensatory amounts awarded to ensure a reasonable relationship [exists] between the two.”40 The court concluded that in the absence of a compensatory award, or where, as in this instance, the jury had awarded class-wide punitive damages before a finding of liability and compensatory damages, a reviewing court could not make this determination. Here, because the court could not measure the reasonableness of the award in relation to the compensatory damages, it upheld the Engle II court’s reversal of the punitive damages award.41
The Engle III court next addressed the issue of class certification. In doing so, it found the Engle II court had erred in overturning its own “previous affirmance of the trial court’s [class] certification order.”42 It did so on the grounds that Florida Rule of Civil Procedure 1.220(d)(1) does not permit a “subsequent (and different) panel of appellate judges to simply substitute its judgment for that of the prior panel and reverse the trial court’s certification order after the trial court entered its final judgment after Phase II.”43
Although the Engle III court held that circumstances did not justify reconsideration of a prior panel’s approval of class certification, it found class certification to be invalid and unworkable nonetheless, based on the fundamental flaws contained in the three-phase trial plan devised by the trial court. In hindsight, the most obvious defect was the trial court’s attempt to apply class-wide punitive damages to highly individualized claims that necessarily relied on proof of causation, damages, and comparative fault for individual class members, issues that numerous subsequent juries would have to resolve. Based on this error, the Engle III court decertified the class.44
While no Florida case at the time had ever addressed the issue of whether class certification is appropriate for some, but not all of the liability issues affecting a class under Fla. R. Civ. P. 1.220(d)(4)(A), the Engle court found a number of U.S. courts of appeal had permitted bifurcated trials pursuant to Fed. R. Civ. P. 23(c)(4), under which “a trial court can properly separate liability and damages issues, certifying class treatment of liability while leaving damages to be determined on an individual basis.”45
By reading Fla. R. Civ. P. 1.220(d)(4)(A) in tandem with Fed. R. Civ. P. 23(c)(4), the Engle III court approved a bifurcated trial plan in which future courts would “retain the jury’s Phase I findings,” other than those of fraud and intentional infliction of emotional distress, which involve highly individualized determinations, along with findings as to the entitlement to punitive damages, which succeeding juries would be left to determine.46 Finally, the Engle court opened the door for class members to file individual suits against the cigarette manufacturers within one year of its mandate, while allowing the Phase I findings to “have res judicata effect” in all subsequent trials.47
Res Judicata Effect: The Heart of Engle
Res judicata is the essence of Engle. By creating a system that at once relies on the “res judicata effect” of the Phase I findings, while requiring subsequent juries to determine issues of causation, damages, comparative fault, and reliance with respect to proving fraud and emotional distress, the Engle court devised a “pragmatic solution” to managing a large population of plaintiffs whose “highly individualized” claims would have to be tried before separate juries.48 In short, this solution balanced the trial court’s blanket application of class-wide liability and damages with the Engle II court’s complete reversal of the Phase I and II verdicts based on a flawed trial plan.49
Latin for “the thing has been decided,” the doctrine of res judicata performs one of the most important functions in the law. It bars the relitigation of all matters that were, or could have been, brought in a prior suit. Generally referred to as “claim preclusion,” the Florida Supreme Court has found, “[t]he doctrine of res judicata not only bars issues that were raised, but also precludes consideration of issues that could have been raised but were not raised in the first case.”50 Observed the Florida Supreme Court in Topps v. State, 865 So. 2d 1253 (Fla. 2004): “The idea underlying res judicata is that if a matter has already been decided, the petitioner has already had his or her day in court, and for purposes of judicial economy, that matter generally will not be reexamined again in any court (except, of course, for appeals by right).”51
Collateral estoppel, by comparison, is a much narrower preclusive doctrine.52 As the Florida Supreme Court has recognized, “[t]he doctrine of collateral estoppel (or issue preclusion), also referred to as estoppel by judgment, is a related but different concept. In Florida, the doctrine of collateral estoppel bars relitigation of the same issues between the same parties in connection with a different cause of action.”53
Statewide, the cigarette companies have tried unsuccessfully to confuse the definitional distinction between res judicata and collateral estoppel. They have done so by arguing the Engle III court really meant to invoke collateral estoppel, rather than res judicata, in determining the effects of the Phase I findings, even though the Engle III court used the terms res judicata 14 times throughout its opinion.54 Were this the case, then every determination of general liability made by the Engle jury in Phase I would require relitigation in all subsequent individual trials, an outcome the Engle III court never conceived nor endorsed, because its ruling specifically allows each plaintiff to rely on the Phase I findings during their individual trials.55
Indeed, there was no need for the Engle III court to distinguish between claim preclusion and issue preclusion — neither phrase appears anywhere in the opinion — because the court stated unequivocally that the Phase I findings would have “res judicata effect,” not “collateral estoppel effect,” and defined precisely what res judicata meant in this context.56
The foundation of res judicata is that a final judgment in a court of competent jurisdiction is absolute and settles all issues actually litigated in a proceeding as well as those issues that could have been litigated. We have explained the doctrine of res judicata as follows: “A judgment on the merits rendered in a former suit between the same parties or their privies, upon the same cause of action, by a court of competent jurisdiction, is conclusive not only as to every matter which was offered and received to sustain or defeat the claim, but as to every other matter which might with propriety have been litigated and determined in that action.”57
By contrast, at this writing, the Florida Supreme Court has applied the phrase “issue preclusion” only three times in its history.58 Each time it equated issue preclusion with collateral estoppel and vice versa.59 Even R.J. Reynolds (RJR) acknowledged the importance of res judicata in its initial brief filed in R.J. Reynolds Tobacco Co. v. Martin, 53 So. 3d 1060 (Fla. 1st DCA 2011), when it wrote, “‘res judicata’ itself is a venerable and broad term that refers to preclusion generally and encompasses both claim preclusion and issue preclusion (i.e., collateral estoppel). Nothing in Engle signals a departure from existing doctrine. It would be extraordinary for the Florida Supreme Court to alter long-standing law in such an elliptical fashion.”60
Likewise, the U.S. Supreme Court has long recognized the inherent fairness in the application of res judicata.61 Addressing the doctrine’s intrinsic values of justice and fairness, the U.S. Supreme Court has found that:
[Res judicata] serves vital public interests beyond any individual judge’s ad hoc determination of the equities in a particular case…. This ourt has long recognized that public policy dictates that there be an end of litigation; that those who have contested an issue shall be bound by the result of the contest; and that matters once tried shall be considered forever settled as between the parties.62
In sum, although res judicata and collateral estoppel both advance the same policy considerations, such as fairness, judicial repose, and economy, collateral estoppel applies only to issues actually litigated, while res judicata applies to claims and defenses that were or could have been litigated, provided the party against whom res judicata is asserted has had notice and a fair opportunity to be heard in a court of competent jurisdiction. Clearly, the Engle defendants had ample opportunity in a year-long trial, in which at least 140 witnesses were called to testify, to raise every defense or counterclaim known under the sun.63
The Engle court obviously knew the difference between res judicata and collateral estoppel when it relied on the doctrine in fashioning its opinion. Arguing in the face of this opinion that Engle progeny plaintiffs must once again reestablish general liability in each individual trial before establishing causation, comparative fault, and damages, simply defies logic. The court invoked res judicata, as opposed to collateral estoppel, with the unambiguous intent of giving the broadest application of the preclusive effects of the Engle jury’s Phase I findings allowable under the law. It did so, in part, because for more than a year the same jury heard the same evidence and reached the same conclusions sufficient to preclude any future relitigation of the same factual findings supporting general liability in subsequent individual trials.
For the court to have held otherwise would have been to ignore completely the crucial role res judicata plays in the administration of justice, which, in turn, would have forced each individual plaintiff to reinvent the proverbial wheel, an outcome the Engle III court never intended. As the First District succinctly noted in R.J. Reynolds Tobacco Company v. Martin, 53 So. 3d 1060 (Fla. 1st DCA 2010), “[W]e find it unnecessary to distinguish between [res judicata and collateral estoppel] or to define what the Supreme Court meant by ‘res judicata’ to conclude the factual determinations made by the Phase I jury cannot be relitigated by RJR and the other Engle defendants.”64
R.J. Reynolds Tobacco Co. v. Martin: The First Engle Progeny Appeal
With the Phase I findings secure in their arsenal, more than 8,000 plaintiffs filed individual claims against the tobacco companies within a year of the Engle court’s mandate. Martin was one of the earliest Engle progeny cases to go to trial,65 and the first to generate an appellate opinion, one that remians a model of clarity for analyzing subsequent progeny cases.66 “Benny Martin was a long time smoker of Lucky Strike, a brand of cigarettes manufactured and sold by RJR, who contracted lung cancer and died in 1995. His widow sued RJR as an Engle class member seeking damages for her husband’s death. A jury trial proceeded on five claims: strict liability; fraud by concealment; conspiracy to commit fraud; negligence; and punitive damages.”67 Mrs. Martin sought noneconomic compensatory damages and punitive damages on behalf of herself as a survivor and on behalf of her late husband’s estate.
Since establishing class membership is an essential prerequisite to proving damages, the trial was bifurcated pursuant to the Engle III court’s blueprint. During the first phase, the trial court instructed the jury to determine whether Mr. Martin was a member of the class, i.e., whether his addiction to nicotine was the legal cause of his death.68 The trial court also instructed the jury to decide the issues of comparative fault, compensatory damages, reliance on the defendants’ fraud, and entitlement to punitive damages.69 The second phase, on the other hand, was limited to determining the amount of punitive damages, if any, to which Mr. Martin’s estate was entitled.70
Following the trial, “[t]he jury rendered a verdict finding that addiction to RJR’s cigarettes was the legal cause of Mr. Martin’s death; RJR conspired to conceal and actually concealed information that was a legal cause of his death; RJR and Mr. Martin are respectively 66 [percent] and 34 [percent] responsible for his death; and that punitive damages [were] warranted.”71 Accordingly, “the jury awarded Mrs. Martin $5 million in compensatory damages, which the court later reduced to $3.3 million based on the jury’s apportionment of fault, and $25 million in punitive damages.”72
The Martin Appeal
With surgical precision, the Martin court wasted no time in cutting to the chase. “The crux of this appeal,” the court wrote, “is the extent to which an Engle class member can rely upon the findings from the class action when she individually pursues one or more Engle defendants for damages.”73 RJR argued that because the Engle Phase I findings proved nothing specific relating to Mr. Martin’s allegations, he could not rely on their res judicata effect to cover his claims.74 The Martin court rejected this argument outright, finding instead that RJR’s position essentially asked the court to “nullify” the Engle jury’s findings, which in turn would mean overturning the Supreme Court’s decision in Engle, something district courts of appeal are prohibited by law from doing.75
Next, RJR invited the court to adopt the 11th Circuit Court of Appeals’ ruling in Brown v. R.J. Reynolds Tobacco Co., 611 F.3d 1324 (11th Cir. 2010).76 In Brown, the court was asked to review an interlocutory appeal from an Engle progeny case filed in the Middle District of Florida, where the district court had entered a pretrial order stating in part, “the Engle Phase I findings may not be used to establish any element of an individual Engle plaintiff’s claim.”77 The Brown court vacated the district court’s order, but nevertheless restricted the application of the Phase I findings in a way the Engle court never intended. It did so by determining the Engle III court really meant “issue preclusion” rather than “claim preclusion” when it used the terms “res judicata effect” because “‘factual issues and not causes of action were decided in Phase I.”78
The Brown court concluded that individual plaintiffs could rely on the res judicata findings only if they could “demonstrate with a ‘reasonable degree of certainty’ which facts were ‘actually adjudicated’” during the Phase I trial.79 This they could do “by pointing to relevant parts of the [year-long] class action trial transcript” and applying those sections to their individual case.80 In short, the Brown court substituted collateral estoppel (encompassing issues actually litigated) for the Florida Supreme Court’s use of res judicata (encompassing all those claims that were or could have been litigated).
The Martin court, however, declined to adopt the Brown court’s interpretation of Engle and its restrictive application of the Phase I findings.81 While the Martin court appreciated from an academic perspective the distinction between “issue preclusion” and “claim preclusion,” this distinction had no bearing on its decision under an Engle III analysis.82 More precisely, because the Engle court unequivocally gave “res judicata effect” to the Phase I findings, the Martin court would not get bogged down in Brown’s semantics so that future courts would be forced to divine the meaning of Engle the way fortunetellers gaze at crystal balls to predict the future.
Significantly, the Martin court rejected Brown’s conclusion that every Engle progeny plaintiff had to quote chapter and verse from the Phase I trial transcript in order to prove the relevance of the Phase I findings to his or her individual claims.83 In the court’s words, it is absurd to think that “every Engle plaintiff must trot out the class action trial transcript to prove the applicability of the Phase I findings” in each individual case.84 “Such a requirement,” if adopted by the court, not only would “undercut the Supreme Court’s ruling,” it also would force individual plaintiffs to relitigate the common issues previously decided during the year-long Phase I trial, which would extend beyond reason the length of individual trials.85
Moreover, a prerequisite of this nature would severely hamper the goals of fairness, repose, and judicial economy in complete opposition to the policy objectives underlying the doctrine of res judicata. This could hardly have been the “pragmatic solution” the Engle III court had in mind when it crafted its opinion. In this light, the Martin court not only concluded the jury had properly considered the Phase I findings together with weeks of testimony adequate to sustain the verdict, it also found “Mrs. Martin produced sufficient independent evidence to prove RJR’s liability for her husband’s death[,]” even beyond the Phase I findings.86
After rejecting RJR’s plea to have the panel rewrite the Engle decision, by adopting the Brown court’s ruling, the Martin court then went on to review the final judgment, including the $25 million punitive damages award. The court held the Phase I final judgment established the evidentiary foundation proving the verdict “conclusive as to the conduct elements of the claims.”87 Using the Phase I findings to connect the dots, Mrs. Martin was able to prove legal causation for the injuries suffered by her late husband’s addiction to nicotine and to substantiate her negligence, strict liability, and fraudulent concealment claims as well.
First, the Martin court disposed of RJR’s contention that the trial court had failed to properly instruct the jury on these claims by directing RJR’s attention to the language in the jury instructions based, in part, on RJR’s pretrial stipulation that nicotine in cigarettes is addictive; that smoking cigarettes causes lung cancer; that Mr. Martin smoked Lucky Strike cigarettes; that every Lucky Strike cigarette he smoked contained nicotine; and that Mr. Martin did not smoke any brand of cigarettes other than Lucky Strike and Camel (another RJR brand). As a result, the court found Mrs. Martin had produced “sufficient evidence for a jury to find that Mr. Martin’s addiction to RJR’s cigarettes was the legal cause of his death.”88
RJR then argued that Mrs. Martin had failed to prove the reliance element of her fraudulent concealment claim “because she put on no direct evidence showing Mr. Martin relied on information put out by the tobacco companies omitting scientific findings on the harmful effects of smoking.”89 The Martin court dispatched this notion by finding the record replete with evidence from which the “jury could infer Mr. Martin’s reliance on pervasive misleading advertising campaigns for the Lucky Strike brand in particular and for cigarettes in general, and on the false controversy created by the tobacco industry during the years he smoked aimed at creating doubt among smokers that cigarettes were hazardous to [one’s] health.”90 Thus, the evidence supporting this inference was more than enough to prove reliance and sustain the verdict.
Pointing to the widely accepted use of inference to establish reliance in tobacco cases tried in other jurisdictions since Engle, the Martin court highlighted the evidence that clearly demonstrated the cigarette companies had for decades engaged in a broad-based public deception campaign by disseminating misleading information and raising doubts in the mind of the public about the dangers of smoking.91 Thus, while each plaintiff must prove reliance, he or she need not identify any discrete statement or omission by the defendants, but may instead prove inferential reliance based upon the long history of the cigarette manufacturers’ public misinformation and propaganda campaign touting the lack of reliable scientific evidence establishing a link between smoking, addiction, and cancer.92
Finally, the Martin court addressed the issue of the $25 million punitive damages award. RJR argued that it was excessive and unconstitutional and, as a result, the trial court had erred by not granting its motion for remittitur. “First, section 768.72(2), Florida Statutes, requires a plaintiff seeking punitive damages to prove by clear and convincing evidence the defendant is guilty of intentional misconduct or gross negligence.”93 Among the many documents introduced in support of her claim, Mrs. Martin produced an internal document written by RJR stating: “In a sense, the tobacco industry may be thought of as being a specialized, highly ritualized and stylized segment of the pharmaceutical industry. Tobacco products uniquely contain and deliver nicotine, a potent drug, with a variety of physiological effects.”94 “At the [same] time, the evidence showed, RJR was publicly denying nicotine is a drug, and tobacco companies including RJR were not only actively concealing their own research results revealing the harmful health effects of smoking cigarettes, but also purposefully misleading the public to believe the issue was unresolved.”95
Although the Martin court found this evidence adequate to uphold the jury’s punitive damages award, the court first determined the award to be presumptively excessive under F.S. §768.73 (2005), which establishes a statutory cap of a 3-to-1, punitive-to-compensatory ratio.96 Nevertheless, under the statute, where a plaintiff can prove by “clear and convincing evidence” that the facts support an award that exceeds the statutory cap, a court may award punitive damages far in excess of the three-to-one ratio without violating a defendant’s due process rights.97
In support of the proposition that “clear and convincing evidence” may at times sustain a punitive damages verdict that exceeds the statutory cap,98 the Martin court looked to Owens-Corning Fiberglas Corp. v. Ballard, 749 So. 2d 483 (Fla. 1999), in which the Florida Supreme Court upheld a punitive damages award that was nearly 18 times the compensatory damages award. In that case, the plaintiff brought a products liability action against Owens-Corning alleging he contracted mesothelioma after 30 years of exposure to Kaylo, a brand of asbestos-laden insulation the company had manufactured and sold to consumers. Like RJR, not only did Owens-Corning know of the dangers inherent in asbestos exposure, it nonetheless marketed the product as “non-toxic,” in “flagrant disregard” for and “apparent indifference” to the safety of those exposed to its product.99
Employing the same rationale as that used in Owens-Corning, the court held RJR exhibited similar contempt for the health and safety of Benny Martin when it marketed and sold to him cigarettes it knew to be defective and dangerous. Equally egregious, RJR had engaged in acts or omissions that intentionally misled the public into thinking its cigarettes were safe, like those described above. As the Martin court found:
The evidence in the instant case demonstrates with similar import RJR’s disregard for the safety of Benny Martin and other smokers of its cigarette brands: decades-long purposeful concealment of the health risks from smoking cigarettes, refusal to take nicotine out of Lucky Strike because sales would decrease, and collusion with other tobacco industry entities to affirmatively mislead the public into thinking cigarettes indeed may not be harmful. We find no abuse of discretion in the trial court’s approval, under section 768.73(1)(b), of the $25 million punitive damages award.100
The court then held that the punitive damages award did not violate RJR’s constitutionally protected rights.101 Given the jury’s consideration of the evidence proving RJR’s wanton and reckless disregard for the public health, by “marketing a product it knew to be harmful and misleading the public about the health risks of smoking cigarettes,” the Martin court found the award wholly reasonable in light of the evidence and that a compensatory to punitive ratio of 7.58-to-1 did not offend basic principles of due process in light of RJR’s misconduct.102 Finding that “Mrs. Martin [also] produced sufficient evidence independent of the Engle findings to allow the jury to find RJR guilty of intentional misconduct or gross negligence,” the Martin court upheld the punitive damages award.103
The Florida and U.S. Supreme Courts Weigh In
Following the Martin decision, RJR petitioned the First District Court of Appeal to certify its opinion for review by the Florida Supreme Court, which the Martin court declined to do. Thereafter, RJR filed a petition based on jurisdiction directly to the Florida Supreme Court. By a unanimous vote of a panel of five justices, the Florida Supreme Court rejected RJR’s petition.104 Similarly, the Florida Supreme Court also declined jurisdictional appeals in the progeny cases of R.J. Reynolds Tobacco Co. v. Gray, 63 So. 3d 902 (Fla. 1st DCA), rev. den., 67 So. 3d 1050 (Fla. 2011), cert. denied, No. 11-755, _ S. Ct. _, 2012 WL 986848 (Mar. 26, 2012);105 Liggett Group LLC, et al. v. Campbell, 60 So. 3d 1078 (Fla. 1st DCA), rev. den., R.J. Reynolds Tobacco Co. et al. v. Campbell, 67 So. 3d 1050 (Fla. 2011), cert. denied, No. 11-755, _ S. Ct. _, 2012 WL 986847 (Mar. 26, 2012);106 and R.J. Reynolds Tobacco Co. v. Hall, 70 So. 3d 642, 642 (Fla. 1st DCA), rev. denied, 67 So. 3d 1050 (Fla. 2011) cert. denied, No. 11-755, _ S. Ct. _, 2012 WL 9866850 (Mar. 26, 2012).107 Next, RJR filed petitions for writs of certiorari to the U.S. Supreme Court seeking review of Martin, along with Gray, Campbell and Hall. On March 26, 2012, the U.S. Supreme Court denied certiorari as to all four.
What the Future Holds
With no further avenues of appeal left open in Martin, Gray, Campbell, and Hall, RJR, along with Philip Morris and Liggett in Campbell, have paid these and other judgments108 in the combined amount of $60,442,000.109 Over time, an accumulation of high-value awards like these, together with hundreds of millions of dollars paid in attorneys’ fees to defend them, could have a negative impact on share prices and the bottom lines of the cigarette producers, making shareholders truly feel the financial bite of the Engle cases. Should this occur, the industry might consider as a rational business decision a global settlement of all Engle cases along the lines of the Master Settlement Agreement reached in 1998. If and when a global settlement is ever reached, Engle plaintiffs will be able to breathe a sigh of relief knowing the cigarette makers have finally met their match.
1 Author’s note: As this article goes to print, the Florida Supreme Court has just heard argument in the case of Philip Morris USA, Inc., et al. v. Douglas, Case No: SC12-617. The court accepted Douglas on the certified question of whether giving preclusive effect to the Engle Phase I findings violates the defendants’ constitutional right to due process. This is the first time since the Supreme Court published its Engle opinion in 2006 that it agreed to revisit it. The reader is encouraged to read the Douglas decision once it is published for any clarifications or modifications made to the meaning of Engle.
2 See Howard A. Engle, M.D. v. Liggett Group, Inc., 945 So. 2d 1246, 1276-77 (Fla. 2006) (Engle III).
3 Id. at 1256 n. 3. The primary Engle defendants were Philip Morris, Inc. (Philip Morris); R.J. Reynolds Tobacco Company (RJR); Lorillard Tobacco Company and Lorillard, Inc. (collectively Lorillard); and Liggett Group, Inc., and Brooke Group Holding, Inc. (collectively Liggett). RJR accepted successor liability for defendants Brown & Williamson Tobacco Corporation and The American Tobacco Company, which it had acquired earlier.
4 As of December 31, 2008, R.J. Reynolds Tobacco Company reported receiving service on behalf of 8,808 plaintiffs. See Reynolds American, Inc., 2008 Annual Report, Form 10-K, p. 11. Currently, Engle progeny cases are filed in 45 of Florida’s 67 counties. See PowerPoint presentation given by progeny attorney Alex Alvarez to Chief Judge Joel Brown and Chief Administrative Judge Jennifer Bailey of Miami-Dade County Circuit Court, June 26, 2012.
5 See Engle III, 945 So. 2d at 1258-59 (detailing events leading up to Master Settlement Agreement). See generally Robert N. Proctor, Prologue, Golden Holocaust: Origins of the Cigarette Catastrophe and the Case for Abolition (2012); Richard Kluger, Ashes to Ashes: America’s Hundred Year Cigarette War, the Public Health, and the Unabashed Triumph of Phillip Morris (1996); and Allan M. Brandt, The Cigarette Century: The Rise, Fall and Deadly Persistence of the Product that Defined America (2006).
8 See Robert N. Proctor, Prologue, Golden Holocaust.
9 Id. See also American Lung Association, Tobacco, http://www.lung.org/associations/states/colorado/tobacco.
10 Essentially, the Engle progeny cases seek to redress the wrongs suffered by a population of smokers who became addicted to nicotine starting in the 1930s, and developed Engle-recognized, smoking-related illnesses on or before the class period ending in November 1996.
11 Liggett Group, Inc. v. Engle, 853 So. 2d 434, 440 (Fla. 3d DCA 2003) (Engle II).
12 Engle III, 945 So. 2d at 1256
13 See Engle II, 853 So. 2d at 441. See also Engle I, 672 So. 2d 39, 40, 41.
14 Engle II, 853 So. 2d at 441.
15 Id. at 450.
16 Engle III, 945 So. 2d at 1257.
17 Id. at 1256.
18 Engle II, 853 So. 2d at 445 n. 8.
19 Id. at 441.
20 Id. at 442.
21 Id. at 441-43, 450-53.
22 Id. at 450. See also Fla. R. Civ. P. 1.220(a) and Fed. R. Civ. P. 23(c)(4).
23 Id. at 456.
24 Id. at 450.
26 Engle III, 945 So. 2d at 1262.
27 Engle II, 853 So. 2d at 458 (citing State Farm Mutual Automobile Ins., Co. v. Campbell, 538 U.S. 408 (2003)).
28 Id. at 454-55.
29 Id. at 451 (citing Ault v. Lohr, 538 So. 2d 454, 457 (Fla. 1989) (Florida law requires that a defendant be found liable before any punishment is imposed)).
30 Engle III, 945 So. 2d 1246.
31 Id. at 1254.
32 Id. at 1262.
36 Id. at 1262-63.
37 Id. at 1263.
38 Id. at 1254.
39 Id. at 1263-64.
40 Id. at 1264.
41 Id. at 1265.
42 Id. at 1266.
43 Id. (citing Engle II, 853 So. 2d at 443 n. 4).
44 Id. at 1267-68.
45 Id. at 1269. Similar to Fed. R. Civ. P. 23(c)(4), Fla. R. Civ. P. 1.220(d)(4)(a) states in part, “[w]hen appropriate… a claim or defense may be brought or maintained on behalf of a class concerning particular issues.”
46 Id. at 1269-70.
48 Id. at 1270.
49 Id. at 1254 (Although the findings do not constitute a complete final judgment, they are to be treated as if they did so and given the same “effect” that res judicata has in any other setting.).
50 Fla. Dep’t of Transp. v. Juliano, 801 So. 2d 101, 105 (Fla. 2001) (emphasis added).
51 Topps, 865 So. 2d at 1255 (Fla. 2004) (citing Denson v. State, 775 So. 2d 288, 290 n. 3 (Fla. 2000)).
52 Id. at 1255.
53 Id. (citing Clean Water, Inc. v. State Dep’t of Envtl. Reg., 402 So. 2d 456, 458 (Fla. 1st DCA 1981)).
54 See generally In re: Engle Progeny Cases Tobacco Litigation, No. 2008-CA-80000 (Fla. 1st Cir. Ct.); and Mildred Abbott v. R.J. Reynolds Tobacco Co., No. 07-3688-CA-14 (Fla. 17th Cir. Ct.), and related cases consolidated under respective case management orders.
55 See generally Plaintiff’s Response to Defendants’ Rule 1.200 Motion to Determine the Preclusive Effect of the Engle Phase I Findings, In re: Engle Progeny Cases Tobacco Litigations, No. 2008-CA-80000 (Fla. 1st Cir. Ct.), filed Sept. 15, 2008, and Plaintiff’s Surreply, filed Sept. 22, 2008.
57 Engle III, 945 So. 2d at 1259.
58 See n. 49, supra, Plaintiff’s Surreply, p.2.
59 See, e.g., State v. McBride, 848 So. 2d 287, 290 (Fla. 2003) (distinguishing between res judicata and collateral estoppel).
60 R.J. Reynolds Tobacco Co. v. Matilde Martin, as personal representative of the Estate of Benny Ray Martin, 53 So. 3d 1060 (Fla. 1st DCA 2010), Initial Brief of Appellant filed Dec. 28, 2009, pp. 28-29 (citations omitted).
61 See, e.g., Hansberry v. Lee, 311 U.S. 32, 40 (1940).
62 Federated Dep’t Stores, Inc. v. Moitie, 452 U.S. 394, 401 (1981) (other citations omitted).
63 Engle v. Liggett Group, Inc., No. 94-08273-CA-22 (Fla. 11th Cir. Ct. Nov. 6, 2000), rev’d, 853 So. 2d 4343 (Fla. 3d DCA 2003).
64 Martin, 53 So. 3d at 1067.
65 See Matilde C. Martin, as personal representative of the Estate of Benny C. Martin v. R.J. Reynolds Tobacco Company, as surviving spouse and on behalf of the estate, Case No.: 2007 CA 2520 (1st Jud. Cir. Escambia Co.).
66 Martin, 53 So. 3d 1060.
67 Id. at 1064.
68 Id. at 1065.
70 Id. at 1066.
74 Id. at 1067.
75 Id. at 1066.
76 Id. at 1067.
77 Id. at 1067 (quoting Brown, 576 F. Supp. 2d 1328, 1347-48).
81 Id. at 1068. State courts are bound only by rulings issued by the United States Supreme Court, not those of lower federal courts.
82 Id. at 1067.
86 Id. at 1062.
89 Id. at 1069.
91 Id. at 1070.
92 Id. (citing Burton v. R.J. Reynolds Tobacco Co., 208 F. Supp. 2d 1187, 1203 (D. Kan. 2002)).
95 Id. at 1071.
99 Owens-Corning Fiberglas Corp., 749 So. 2d 483.
100 Martin, 53 So. 3d at 1071.
101 Id. at 1072.
103 Id. at 1070.
104 R.J. Reynolds Tobacco Co. v. Martin, 53 So. 3d 1060 (Fla. 1st DCA 2010), rev. denied, 67 So. 3d 1060 (Fla. 2011), cert. denied, No. 11-754, 2012 WL 986849 (Mar. 26, 2012).
105 Final judgment: $4.2 million comps; $2 million punitives.
106 Combined final judgment: $3.354 million comps.
107 Final judgment: $3.25 million comps; $12.5 million punitives.
108 See R.J. Reynolds Tobacco Company v. Alexander, 90 So. 3d 306 (Fla. 1st DCA 2012) (dispensing with appeal to U.S. Supreme Court following per curiam affirmance; final judgment: $1.275 million comps; $2.5 million punitives); Philip Morris, et al. v. Huish, 2012 WL 975750 (Fla. 1st DCA) (same; combined final judgment: $375,000 comps, $3 million punitives).
109 Verdicts and final judgments as of September 21, 2012:
* Does not include pre- and post-judgment interest, or attorneys’ fees paid to plaintiffs under proposals for settlement.
† All money judgments in favor of plaintiffs. No counterclaims filed in Engle cases.
J. B. Harris is a trial lawyer in Miami. He received his J.D. from the Emory University School of Law in Atlanta, GA, and his M.A. from the Johns Hopkins University School of Advanced International Studies in Washington, D.C. He thanks all Engle progeny lawyers across Florida who have briefed and argued before the courts the meaning of Engle.