JOHN F. BANZHAF III, B.S.E.E., J.D., Sc.D.
A jury in Florida has slammed Reynolds American, Inc.(NYSE:RAI) with a $23.6 BILLION dollars in punitive damages in a law suit alleging that the company unlawfully lied and failed to warn a cigarette smoker who became addicted and died, notes public interest law professor John Banzhaf.
This verdict provides a template for future actions on behalf of other Florida residents who, under an earlier decision known as Engle, need no longer prove that the tobacco company’s conduct was wrongful, so long as they can show their addiction, and that smoking caused their death or other health injuries, says Banzhaf, who helped bring about this extraordinary precedent in the original Engle case.
While some may question whether more than $23 billion in punitive damages is excessive, Prof. Banzhaf notes that punitive damages – which are awarded above and beyond the actual damages the plaintiff suffered – are designed to deter and hopefully prevent wrongful conduct by this and other defendants.
But, notes Banzhaf, $23.6 billion is close to only 2% of Reynolds’ annual income, and about 1% of its total assets. If a jury wanted to deter a driver who had killed a pedestrian from continuing to drive in a reckless manner, it would certainly hit him with a penalty of more than a few thousand dollars (about 2% of average income). To get the attention of a corporate giant which annually kills hundreds of thousands of people and brings in hundreds of billions, you have to hit them with an equivalent penalty, he argues.
Although this verdict will certainly be appealed, and may be reduced somewhat by a higher court, it should serve as a warning to tobacco companies, and make it much easier for other families in Florida likewise devastated by this deadly product to force companies to settle for reasonable amounts, Banzhaf says.
“This decision opens the door for thousands of other smoker law suits in Florida seeking hundreds of millions if not billions of dollars,” argues Banzhaf.
It may also encourage lawyers in other jurisdictions to bring similar actions. “There’s little which is unique about Florida when it comes to the deadly nature of cigarettes,” he notes.
A huge jury verdict, awarding the widow of a smoker who died of lung cancer over $23 BILLION in total damages, provides a very strong incentive and a wake up call to the tens of thousands of other families devastated by the death of a smoker to immediately seek out a lawyer and file a claim before the stature of limitations runs out.
It also offers a very strong incentive for lawyers to take on such cases without the payment of any attorney fees by the families, because a contingency arrangement under with the lawyer gets a percentage of whatever he wins provides a huge incentive when verdicts are as large as they frequently are in this and other cigarette cases, says public interest law professor John Banzhaf.
Filing a smoker law suit is particularly easy in Florida because, under the so-called “Engle” case in which Banzhaf participated, attorneys representing smokers no longer have to prove to a jury that the defendant tobacco company acted wrongfully.
That has already been established, the judge will charge the jury – all that the smoker’s attorney must prove to win is that the smoker had become addicted, and that his smoking was the cause of, or at least a substantial factor in causing, the disease which killed or incapacitated the smoker.
In the Engle class action case, a jury found that the major tobacco companies had engaged in egregious misconduct which caused the deaths of countless smokers, and handed down a $145 billion verdict, says Banzhaf, who has been called “The Law Professor Who Masterminded Litigation Against the Tobacco Industry,” and “a Driving Force Behind the Lawsuits That Have Cost Tobacco Companies Billions of Dollars.”
When the Florida Supreme court ruled that it was improper to litigate all of the issues as a single class action, and that the verdict was excessive, it nevertheless left standing the official findings that the conduct of the tobacco companies made them liable, and that smoking was deadly and addictive, and caused cancer and other diseases.
Thus, in this case, and in many others now pending or still to be filed, plaintiffs’ attorneys no longer have to prove wrongdoing. To win, and be entitled to compensation, a plaintiff need prove only that the smoker became addicted, and that the smoking caused a disease which led to his death. Thus, smoker law suits in Florida are much easier to win that those in other states.
But, suggests Banzhaf, attorneys in other states may be encouraged by this huge verdict to bring new smoker law suits, and perhaps establish the same legal precedent in their home state.
“After all, says Banzhaf, cigarettes are no less deadly in other states, and juries in states other than Florida are probably just as angry at major cigarette makers, and therefore willing to return enormous verdicts, as those in this $23 billion Robinson case.
Unfortunately, says Banzhaf, the punitive damage award will probably be reduced somewhat upon appeal, since courts haven’t yet accepted that, to effectively punish a huge corporation, you have to impose a financial penalty which is in some way proportionate to its size and income.
“Because you can’t put a corporation – Reynolds or GM – in prison or even subject it to house arrest when it wrongfully kills many innocent victims, you can only try to deter it by imposing punitive damages which are effective and meaningful given its huge annual profits and net worth,” says Banzhaf.
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JOHN F. BANZHAF III, B.S.E.E., J.D., Sc.D.
Professor of Public Interest Law
George Washington University Law School,
FAMRI Dr. William Cahan Distinguished Professor,
Fellow, World Technology Network,
Founder, Action on Smoking and Health (ASH)