Feature Article

On July 6, the Supreme Court of Florida upheld an appellate court ruling in the Engle case, overturning a $145 billion punitive damages award against cigarette manufacturers in a class action lawsuit. The Court held that the class had to be decertified because issues of causation and apportionment of liability required individual determinations and were not appropriate for class action treatment. However, the Court upheld several key findings of fact that will aid future litigants in suits against the tobacco industry. Though the ruling may be a short-term victory for the tobacco industry, the longer-term result will likely be thousands of individual lawsuits that the industry will be required to defend.

This lawsuit began in October 1994 with the filing of a class action lawsuit encompassing all smokers in the U.S. It was later narrowed to a class including Florida smokers only. The trial court issued a trial plan in 1998 that divided the trial into three phases, where Phase I would consist of a yearlong trial to consider the issues of liability and entitlement to punitive damages for the class as a whole. In Phase II, the lump sum punitive damage award to be assessed in favor of the class as a whole would be considered. Phase III would determine the individual liability and compensatory damages for each class member. In 2000, a Miami jury completed Phases I and II, finding the tobacco companies liable to class members and issuing a massive punitive damages award of $145 billion.

On the issue of punitive damages, the Florida Supreme Court concluded that the trial court erred in allowing the jury to determine a lump sum amount before it determined the amount of total compensatory damages for the class. The court, following the U.S. Supreme Court's State Farm v. Campbell decision, decided that in order to evaluate the excessiveness of punitive damages in favor of the class, the court would have to compare it to the compensatory damages award so as to find a reasonable relationship. Since the trial court had failed to consider compensatory damages for the class before the consideration of punitive damages for the class, the punitive damages had to be reversed.

Though decertifying the class, the Florida Supreme Court reversed the appellate court and upheld most of the jury's Phase I findings regarding liability. Thus, individual actions may proceed, and the findings of liability against the defendants will be given preclusive effect. In other words, the defendants will not be able to reargue their liability when sued by individual smokers. The Phase I findings regarding the connection between cigarette use and disease, the addictive nature of nicotine, the defective and unreasonably dangerous nature of cigarettes, the defendants' concealment of material information concerning the health effects of smoking, and the negligence of the defendants will all be taken as conclusively established. Plaintiffs will be able to focus on establishing that they relied on the misrepresentations of the tobacco industry and suffered injuries as a result. On the day the ruling was issued, Ed Sweda of the Tobacco Products Liability Project summed up the findings: "Today's ruling is a major victory for injured Florida smokers since there now exists a viable and streamlined approach to litigation against the tobacco companies - with the prospect of both compensatory and punitive damages.  Much of what would need to be proved to establish punitive damages, i.e., reprehensible industry misconduct, is now established as part of the Phase I Findings."

The case is Engle v. Liggett Group, Inc., No. SC03-1856, 2006 Fla. LEXIS 1480 (July 6, 2006).