types and uses of tobacco litigation

8/8/2019 Types and Uses of Tobacco Litigation

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Types and Uses of Tobacco

Litigation

Prepared by

Tobacco Control Resource Center, [email protected]

www.tobacco.neu.edu


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6 Major Uses of Litigation

Law Enforcement

Non-Governmental Organizations(NGOs) Compel Enforcement

Industry Counter-attacks

Secondhand Smoke Cases

Compensatory Damages Cases

Enforcement ofLaws ProhibitingDeceptive Conduct


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Law Enforcement

While many tobacco control objectivescan be achieved through legislation,legislation is effective only to the extentthat it is enforced.


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Law Enforcement

Enforcement is a major issue becausemany legislative initiatives seek to change

social behavior.

The tobacco industry has strongmotivation and little qualms about evadinglegislative restrictions on its behavior.


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Law Enforcement

Bothpublic education and activeenforcementare often necessary if

tobacco control laws are to be useful andnot just dead letters.


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Law Enforcement

Enforcement can be accomplishedthrough:

Administrative Measures (e.g. licensesuspensions or revocations)

Criminal/quasi-criminal Processes (e.g.civil fines)


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Law Enforcement

Most enforcement activity does not involveextensive litigation, because the facts are

usually easy for the authorities to establish,and the level of sanctions are typically lowenough that it is not worthwhile for thewrongdoer to fight the charges in court.


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where the defendant, often supported by thetobacco industry, refuses to comply in order toforce a legal challenge to the validity of thetobacco control legislation

or in smuggling and tax-avoidance cases wherethe penalties sought may be very large.

Law Enforcement

Occasionally this litigation is hard-fought,such as:


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Litigation by NGOs

Many tobacco control laws and regulationsare rarely, if ever, formally enforced.

Occasionally this is a good sign, as with lawsrestricting smoking in public places in theUnited States that are informally, but

effectively, enforced through social pressure.


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Litigation by NGOs

However, where public support has notbeen mobilized behind the policy

underlying the law, the failure of publicauthorities to enforce the law results in itsbeing flouted by anyone who has

incentive to do so.


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Litigation by NGOs

Examples of unenforced or under-enforced laws:

The status of sales-to-minors bans in theU.S. until the 1990s

Restrictions on smoking in Parisianrestaurants

Bans on advertising in many countries sincethe bans adoption


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Litigation by NGOs

In the United States the doctrine of"prosecutorial discretion" prevents private

parties from forcing government action, butstate consumer protection laws frequentlyallow parties to act as "private attorneysgeneral" in the public interest to requireproduct manufacturers or sellers to obey thelaw.


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Litigation by NGOs

Use of Consumer Protection Laws

A 1987 lawsuit in Massachusetts brought by an NGO against a

local convenience store chain alleged that the store had soldcigarettes repeatedly to teenagers in violation of state law.

This resulted in the store agreeing to demand positiveidentification from young people before selling them cigarettesas well as monitoring their own stores for compliance with thenew policy.

This was the first time that such a "carding" requirement wasimposed anywhere in the United States, and set a model forsubsequent regulations.


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Litigation by NGOs

Some legal systems do permit NGO's to bring"public interest" actions to require the

government to enforce the law, includingrelevant constitutional provisions.


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Industry Counter-Attacks

While the tobacco industry becameincreasingly litigious in the course of the

1990s in the U.S., it threatened morelitigation than it brought.


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In the U.S., two major Supreme CourtDecisions based on challenges from the

tobacco industry have caused a lot ofdamage to tobacco control:

A 2000 decision invalidating FDA jurisdiction over

tobacco products

A 2001 decision negating state regulation ofadvertising.


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Ending U.S. Food and Drug AdministrationJurisdiction over Tobacco Products

The decision leaves the authority to establish FDAjurisdiction over tobacco products to Congress.

Congress has never taken affirmative action toeffectively regulate the tobacco industry, and is notlikely to do so in the foreseeable future.

As a result, there is no central regulatory authorityin the U.S. over cigarette design, packaging, or

marketing.


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Regulation of Tobacco Advertising

The 2001 U.S. Supreme Court decisionregarding Massachusetts regulation of tobaccoadvertising nullifies all state and local regulationof tobacco advertising due to federal

preemption through the Federal CigaretteLabeling and Advertising Act.


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those that seek to ban smoking outright, or at leastto ensure that nonsmokers can avoid exposure tosecondhand smoke

and those that achieve change indirectly by making

employers pay substantial damage awards forneglecting to protect employees from secondhand

smoke exposure.

There are two types of cases that exert

pressure to change social norms in regard

to secondhand smoke:


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In a 1983 lawsuit against the Commonwealth of Massachusetts,a nonsmoker sought to have a safe, i.e. smoke-free, workenvironment. The state settled the case by providing smoke-freeworkplaces to all employees.

Similar obligations have been placed on governmental bodies

and regulated industries through the Americans with DisabilitiesAct, the Rehabilitation Act and other similar state and federal

regulations, on the theory that a variety of medical conditionsdisable people from being in smoky environments.

Smoking Bans


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Cases seeking financial compensation fromemployers are more numerous and widespreadthan smoking bans.

Successful cases have been brought in Sweden,

Britain, and Australia, as well as the U.S.

Prior history of smoking has not disqualifiedclaimants, so long as the secondhand smokeexposure was a substantial contributing cause of

their illness or disability.

Compensation from Employers


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Examples of Successful Cases:

A 2001 Australian jury award ofAus$466,000 to a bartender whocontracted throat cancer, combined with a handful of earlier lessgenerous awards, led to a movement throughoutAustralia toban smoking in restaurants, bars, and casinos.

InB

ritain a few modest awards led the government to rethinkoccupational safety rules and mandate protections fornonsmokers.

In the U.S. the fear of such awards has resulted in insurers,legal counsel for employers, and groups representing buildingowners and managers urging their insured, clients, and

members to eliminate indoor smoking.


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A

number of cases have required disability insurers and pensionplans to cover employees who were forced to leave the workplacebecause smoke-related medical conditions.

Others have required employers to pay back wages to employeeswho were fired for complaining about smoky working conditions orfor refusing to work in these conditions.

These have added to the impression among employers and theirinsurers and counsel that prudence requires a smoke-freeworkplace.


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Tobacco Products Liability Suits Offer atLeast Six Potential Social Benefits:

Raise the cost of tobacco products

Draw public attention to the dangers of smoking

Can motivate industry change

Unearth incriminating internal documents throughdiscovery

Money from verdicts can be used to reimbursehealth-care costs

A flood of cases could bankrupt the industry


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Raising the Cost of Tobacco Products

Smoking costs over $100 billion in health care and lostincome each year in the U.S.

Shifting some of this cost to the manufacturers throughlitigation would force an increase in prices.

Higher costs would deter youth from starting smoking asseen since 1996 with a decline in 12th grade studentssmoking by more than 1/3rd, mostly attributable to settlementof state Medicare reimbursement cases.


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Drawing Public Attention to Smoking Dangers

Putting a face to the harmful effects of smoking helpsthe public realize the danger.


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Fear of large punitive damage awards, such as the $28 billionBullockcase, may motivate the industry to alter its behavior

Concern about product liability awards is frequently cited bymanufacturers of other products as reasons for includinggraphic warnings, altering product designs, or even withholding

particularly dangerous products from the market.

The "voluntary" changes to date have been modest and mostlycosmetic, but movement is finally perceptible.

Motivating Industry Change


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Internal documents have been instrumental inpersuading juries to focus on the industriesmisdeeds.

The availability of documents online and in

depositories have helped make the industry apolitical pariah.

Document-based studies of industry misbehaviorwithin and outside the U.S. have assisted tobaccocontrol efforts around the world.

Discovering Industry Documents


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Money from verdicts and settlements can be usedto reimburse individuals and third-party health carepayers for injuries and expenses caused bytobacco products.

Some states in the U.S. use money they receivefrom Medicaid reimbursement cases and the 1998Master Settlement Agreement to fund tobaccocontrol programs.

Reimbursing Health-care Costs


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With large punitive damage verdicts like the $28billion Bullockcase on the rise, there is a possibilitythat a flood of such cases could bankrupt theindustry.

A bankruptcy court could require tobaccocompanies to change their behavior or make theirproducts less toxic.

Bankrupting the Industry


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Enforcement of Laws Prohibiting

Deceptive Conduct

Tobacco companies, like all other legal

entities, are subject to general restrictionsagainst obtaining money dishonestly.


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Deceptive Conduct

The state lawsuits almost all sought injunctive

relief under these state consumer protectionacts.

In response to these claims, the resulting

settlements, including the November 1998Master Settlement Agreement, containedseveral provisions restricting various tobaccoindustry marketing techniques.


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Deceptive Conduct

bans on outdoor advertising

the distribution of merchandise thatadvertised tobacco products

limitations on sponsorship of concerts andother public events.

Restrictions Included:


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Deceptive Conduct

Federal law in the U.S. has an even more powerfulinstrument against businesses like the tobaccocompanies whose success depends on deceivingtheir customers. The Racketeer-Influenced andCorrupt Organizations Act (RICO) allows the UnitedStates Department of Justice to seek judicial orders

fundamentally changing the way the industry doesbusiness, as well as disgorgement of all "ill-gottengains."


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Deceptive Conduct

Expert reports filed in 2001 in a case brought by theDepartment of Justice against the tobacco industryindicate that such ill-gotten gains amount to morethan $200 billion, and by some calculations almost $1trillion.


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Deceptive Conduct

The discovery of the industry's deep

involvement in smuggling cigarettes to manycountries has led to suits by European,Canadian, and Latin American governmentsseeking lost tax revenues, enforcement costs,

and disgorgement of ill-gotten gains.


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Litigation by the end of the 20th

Century Most types of tobacco litigation on the upswing, with some

already having a major impact on tobacco control

The Canadian and American Supreme Court decisionsinvalidating tobacco advertising restrictions and FDA jurisdictionover tobacco products halted important tobacco control effortsthat had been well underway.

State lawsuits against the industry made public millions of pagesof internal industry documents thereby feeding tobacco controlefforts around the globe


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Litigation by the end of the 20th

Century Settlements of these cases led to dramatic price increases,

greatly reducing youth consumption

Some of the settlement payments supported aggressive newstate and national tobacco control campaigns

Agreed-upon advertising and marketing restrictions at least puta crimp on the industry's preferred techniques for maintaining

and expanding their markets.


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Litigation in the 21st Century and

Beyond Likely to spread world-wide, raising consciousness of the

dangers of tobacco use and of exposure to tobacco smoke, andof the nefarious role played by cigarette manufacturers, even incountries where tobacco use and marketing is currentlyuncontroversial.

Litigation will be increasingly used by NGO's to forcegovernments and tobacco companies to take existing lawsseriously, and to obtain judicial orders making public places

smoke-free.

NGO's and health departments will become increasingly adeptat drafting laws that can withstand industry legal attacks, anddefending them when these attacks arrive.


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Litigation in the 21st Century and

Beyond Countries other than the United States will begin holding

tobacco companies responsible for the health care costsattributable to their products and conduct, resulting in prices

increasing, consumption declining, and increased funding oftobacco control programs.

Some tobacco companies will probably find their way intobankruptcy court, giving public health authorities and NGO'snew opportunities to shape how tobacco products get

manufactured and marketed. Finally, more vigorous efforts can be expected to require

tobacco manufacturers and their executives to avoid illegalconduct, and a wide range of legal sanctions, civil and criminal,can be anticipated.


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FurtherInformation on Tobacco

LitigationRelated Publications from the Tobacco Control

Resource Center:

Special Feature, WorldsBest Practice in Tobacco Control - Litigation:USA, Tobacco Control 6 (2000)

The Engle Verdicts and Tobacco Litigation, 321 British Medical Journal312 (5 August 2000)

Will Big Tobacco Seek Bankruptcy Protection? A $145 Billion VerdictPoses the Question, 26:2 William and Mary Environmental Law and PolicyReview359 (Winter 2001)

Roles of Tobacco Litigation in Societal Change, in Tobacco, the PublicHealth Disaster of the Twentieth Century(in press) Gray, Nigel ed. et al.


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FurtherInformation on Tobacco

Litigation

For updates on current tobaccolitigation around the world, visitwww.tobacco.neu.edu.


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For Even More Information

Tobacco Control Resource Center, Inc.

Northeastern University

360 Huntington Avenue

117 Cushing Hall

Boston, MA 02115

617.373.2026

617.373.3672 fax

[email protected]

www.tobacco.neu.edu