Engle v. Liggett: has big tobacco finally met its match?

• Author: Harris, J.B.

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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. Engles 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 Engles 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.

Engle's Beginnings

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 combined (9)--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...