The biggest legal storm hanging over the tobacco industry -- about 8,000 smoker lawsuits in Florida -- may have begun to dissipate yesterday.
The 11th Circuit Court of Appeals ruled that plaintiffs bringing a so-called "Engle" case before a federal court will have to individually prove two pivotal elements:
• The cigarettes smoked by those involved in the case were defective;
• The manufacturer withheld information, keeping the smoker from fully understanding the potentially addictive and defective nature of the cigarettes.
The cases sprung from a decision in 2006 by the Florida Supreme Court that decertified a class-action lawsuit initially filed by Howard Engle. The 2006 ruling allowed former class members to file individual lawsuits stating that cigarettes caused their respective illnesses.
The cases involve consumers who smoked before a law went into effect requiring warning labels on cigarette packaging.
Yesterday's ruling directly affects about 4,000 lawsuits that have been held up in the federal-court system.
However, analysts said it is likely to affect about 4,000 other lawsuits in the Florida court system. Eighteen of at least 20 cases that have gone to a jury were won by the plaintiffs.
The financial stakes are high for plaintiffs and defendants.
The combined compensatory and punitive jury awards in the 18 plaintiff victories is about $287 million, according to Ed Sweda, a senior lawyer for the Tobacco Products Liability Project at Northeastern University School of Law in Boston.
An estimated $214.6 million was awarded against R.J. Reynolds Tobacco Co. as well as $69 million against Philip Morris USA and $3.8 million against the Liggett Group. Most of the verdicts have been appealed, and no payments have been made.
Still, the rate of plaintiff successes led some analysts to speculate that the manufacturers would be compelled to reach some sort of deal along the lines of the landmark 1998 Master Settlement Agreement with 46 state attorneys general.
"Here's another example of the tobacco industry knowing how to make lemonade out of the lemons they are handed," said Dr. Elizabeth Whelan, the president of the American Council on Science and Health. "This ruling could have the effect of having these plaintiffs and their attorneys start from scratch in terms of causation, which could lead some plaintiffs to drop out from the cost of taking their case further."
As is typical in any tobacco litigation, both sides claimed they will benefit from the ruling.
"The logic of this opinion supports our position that every Engle-related judgment to date against Reynolds in the Florida state courts should be reversed," said Martin Holton III, the general counsel for R.J. Reynolds Tobacco Co. Reynolds called the ruling "a watershed" decision.
Murray Garnick, an associate general counsel representing Philip Morris, said "the appellate court has rejected arguments by plaintiffs that they have an automatic and unlimited right to use the findings" from the Engle case.
"In the court's own words, plaintiffs have a ‘considerable task' to show with ‘reasonable certainty' that the facts they want to establish were ‘actually decided' by the prior jury."
The Public Health Advocacy Institute viewed the ruling as removing a legal roadblock from the federal cases, giving those plaintiffs "a green light to have their cases proceed to trial."
"The plaintiffs, under today's ruling, only need to show that the jury was presented with persuasive and compelling evidence that all of the defendants' cigarettes were dangerous and unreasonably dangerous during phase 1."
rcraver@wsjournal.com
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