Judge Finds Tobacco Settlement Bars Claims for Punitive Damages
Jul 31, 2007, 13:54
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A federal judge has ruled that New York's participation in the nationwide $208 billion settlement reached in 1998 between 46 states and the tobacco industry bars subsequent claims for punitive damages in smokers' damage actions in New York. Southern District of New York Judge Charles L. Brieant in Mulholland v. Philip Morris, 05-9908, also rejected a design-defect theory that led to a $20 million verdict against two cigarette manufacturers in a separate 2005 state case. More than $17 million of that verdict stemmed from an award of punitive damages. Jerome H. Block of Levy Phillips & Konisberg, who represented the smoker in the case decided July 23, said that after the case is concluded, both rulings -- barring punitive damages and the design defect claim -- would be appealed. Brieant's ruling had the effect of sharply limiting the claims of a smoker who died of lung cancer in 2006 at the age of 57 to a three-year period, from 1961 to 1964. The plaintiff, David Mulholland, began smoking in 1961 at age 13. The suit's claims for inadequate warnings and fraudulent concealment extend to 1964, at which point the action claims he was addicted to cigarettes. Brieant ruled that Mulholland's wife, Florence, who is suing as his administratix, can proceed to trial on those two claims. Mulholland smoked Marlboros, which are manufactured by Philip Morris, the sole defendant in the case. Brieant's ruling barring smokers' punitive damages on a res judicata theory is the first in New York, according to Thomas J. Quigley of Winston & Strawn, who represented Philip Morris. New York state had sued the tobacco industry in 1997 as a predicate to its participation in the nationwide settlement the next year, of which its share was $25 billion. As a result, Brieant, who sits in White Plains, concluded that the Mulhollands and Philip Morris were "in privity" with the parties to the earlier action, which had been brought by the state on a parens patriae theory. In granting summary judgment dismissing the Mulhollands' punitive damages claims, Brieant wrote that to allow them to claim "a private interest in punitive damages" would violate a strong New York public policy. The Mulhollands' lawyer, Block, noted that the Florida Supreme Court, when presented with a similar issue, had allowed claims for punitive damages despite Florida's having brought a lawsuit, like the one in New York, which allowed it to participate in the nationwide settlement.
DEFECTIVE DESIGN CLAIM
In rejecting the Mulhollands' defective-design claim, Brieant refused to accept a theory that was the sole basis for the $20.5 million award in 2005 against Philip Morris and the American Tobacco Co., which has since merged with Brown & Williamson. An appeal of the verdict in the New York County case of Rose v. Philip Morris, 101996/02, is currently before the Appellate Division, 1st Department. Brieant rejected the defective-design claim, finding that there was no feasible alternative to Marlboros because the other safer alternatives that had been offered by the Mulhollands' expert had been rejected by the marketplace. The "reduced carcinogen" and "nonaddictive" cigarettes cited as safer alternatives by the Mulhollands' expert were "indisputably rejected by consumers," Brieant wrote. "A state law requirement that allows only cigarettes with no tar or no nicotine to be sold is a virtual ban on cigarettes," the judge wrote, "just as a requirement that allows only 'alcohol-free' liquor to be sold would be a ban on whiskey." In a separate ruling in a different smoker's case, Clinton v. Brown & Williamson, 05-9907, Brieant rejected claims of fraud in the marketing of light cigarettes through the use of terms in their advertising such as "light" or "lower in tar or nicotine." Those state claims were pre-empted by the federal Cigarette and Labeling Act, Brieant concluded. The Clinton decision was also issued on July 23. An appeal of a ruling by Eastern District of New York Judge Jack B. Weinstein, which certified a class action in Schwab v. Phillip Morris, 04-1945, against the tobacco industry for the way it has marketed light cigarettes is pending before the 2nd U.S. Circuit Court of Appeals.
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