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History of Tobacco Litigation

1999–Present

While the MSA resolved a major litigation threat to the industry, it did not eliminate the other types of pending lawsuits. These mainly fall into three major categories: individual cases filed by smokers and non-smokers; the remaining and new types of class actions filed on behalf of classes of smokers; and health-care cost recovery actions filed by third parties such as asbestos companies, hospitals, insurers, municipalities and union trust funds that sought to recover medical expenses they alleged had been paid to treat sick smokers.

In the only union health fund case to go to trial, known as the Iron Workers case, a federal court jury in Akron on March 18, 1999, unanimously ruled in favor of Philip Morris USA and the other major U.S. cigarette manufacturers. The Court held that the companies were not responsible for the alleged smoking-related medical costs paid by Ohio’s labor union health care funds for their workers. The class action was filed in 1997 on behalf of more than 100 unions who sought up to approximately $2 billion in damages for the cost of workers’ medical care.

In the Blue Cross Blue Shield case, the only health insurer case to go to trial, a Brooklyn federal jury on June 4, 2001, rejected Empire Health Choice’s original request for hundreds of millions of dollars in alleged damages to provide medical treatment to injured smokers. On appeal, the U.S. Court of Appeals for the Second Circuit reversed the $17.8 million in compensatory damages awarded to the plaintiff under New York’s consumer protection statute, following a ruling by New York’s highest court that Empire could not use the state consumer protection law to pursue direct claims for the recovery of medical expenses from cigarette manufactures.

The only active reimbursement case pending against cigarette manufacturers in the U.S. is known as the City of St. Louis case. The City of St. Louis, Missouri, and approximately 50 Missouri hospitals are plaintiffs in the action. The case was filed in 1998, and remains pending in the pre-trial phase in a Missouri state court.

Although several foreign governments have filed medical cost recovery cases in the United States, most of these cases have been dismissed. The federal judge in Washington, D.C., assigned to consider these cases rejected the first several of those lawsuits (filed by Guatemala, Nicaragua and the Ukraine). The U.S. District Court of Appeals for the District of Columbia Court upheld those dismissals in 2001. Florida state courts dismissed cases filed by Venezuela and the Brazilian State of Espirito Santo using the same rationale as federal courts, and these dismissals were upheld on appeal by the Third District Court of Appeal in Miami in 2003. The other 23 foreign sovereigns who filed cases in Florida voluntarily dismissed their cases after the Florida Supreme Court refused to hear Venezuela’s appeal.

On September 22, 1999, in the federal court for the District of Columbia, the "DOJ lawsuit" was filed by the U.S. Department of Justice against major U.S. cigarette manufacturers and other defendants. On September 28, 2000, the Court dismissed the government's claims seeking medical cost reimbursement but allowed the claims based on the federal Racketeering Influenced and Corrupt Organization Act ("RICO") to proceed. The trial, which proceeded as a bench trial, ran from September 21, 2004 until June 9, 2005. The Justice Department lawyers initially sought "disgorgement" of $280 billion, a figure they claimed represented industry-wide "ill gotten gains" from decades of alleged fraudulent conduct. On February 4, 2005, the D.C. Court of Appeals ruled that disgorgement is not a remedy available to the government. In the wake of the Court of Appeals' decision, the government, in a June 27, 2005 post trial filing, restructured its remedy request so that the major financial element is a $14 billion cessation and counter marketing program. On August 17, 2006, the court refused to order the companies to pay for a cessation and counter marketing program but found, among other things, the companies must remove descriptors such as “light” or “ultra light” from cigarette packages and publish statements concerning smoking and health issues. Philip Morris USA and Altria Group will seek appellate review of the decision.

As for smokers’ class actions, only four cases have been tried to verdict to date. On May 6, 2004, the West Virginia Supreme Court upheld the jury's decision that the tobacco industry should not be required to pay for medical monitoring. In the Engle case in Miami, Florida, a state court jury returned the largest punitive damages verdict in the history of civil litigation, a total of $145 billion in punitive damages. This verdict was appealed to Florida's Third District Court of Appeal, and the verdict was reversed and the class ordered decertified in May 2003. On July 6, 2006, the Florida Supreme Court decertified the Engle class and reversed the state court jury's award of $145 billion in punitive damages because, as a matter of law, the award was improper and excessive. In the Scott case in New Orleans, Louisiana, a state court jury rejected the plaintiffs' request for a 25-year medical monitoring program, but awarded approximately $590 million for a 10-year smoking cessation program. That verdict is on appeal.

Plaintiffs’ lawyers have filed a series of class actions in several states involving "Lights" cigarettes. These lawsuits contend that lower tar cigarettes do not deliver lower levels of tar and nicotine to the smoker than regular, full-flavor cigarettes and are advertised as safer when they are not. Remedies sought include financial reimbursements for members of the class. One of these cases, the Price case in Madison County, Illinois, was the fourth class-action case tried to verdict. In March 2003, the judge awarded $7.1 billion in compensatory damages to the class and $3 billion in punitive damages. Philip Morris USA appealed to the Illinois Supreme Court and on December 15, 2005, the Court ruled in favor of the company and reversed the trial court’s judgment.

Plaintiffs’ lawyers have also filed nationwide class actions against the tobacco industry. In a case known as In re Simon II Litigation, Judge Jack B. Weinstein of the U.S. District Court for the Eastern District of New York certified a nationwide class of punitive damage claimants as a "limited fund" class action. The suit contended that tobacco companies fraudulently hid the health risks of smoking. On appeal, the U.S. Court of Appeals for the Second Circuit reversed the trial court’s decision and decertified the class, expressing concerns that an action which sought only punitive damages would create insurmountable due process concerns.

Another nationwide class action filed in the U.S. District Court for the Eastern District of New York, also involving "light" cigarettes, is a case known as Schwab. Filed in 2004 before Judge Weinstein, the class alleges Philip Morris USA and other defendants violated federal laws by falsely claiming that "light" cigarettes were safer than higher-tar cigarettes. Pre-trial proceedings on class certification are continuing in the trial court.

To date, class certification has been denied or reversed by courts in over 60 smoking and health class actions in approximately 19 states and the District of Columbia.

Finally, with respect to individual cases, in 2005, juries returned defense verdicts in four of five cases Philip Morris USA tried. Philip Morris USA won both of the cases it tried in California in 2005.

Since January 1999, verdicts have been returned in 43 smoking and health, "Lights"/ "Ultra Lights," and health care cost recovery cases in which Philip Morris USA was a defendant. Verdicts in favor of Philip Morris USA and other defendants were returned in 27 of the 43 cases. Of the 16 cases in which verdicts were returned in favor of plaintiffs, four have reached final resolution. Six of plaintiffs' verdicts occurred in cases on the West Coast and five in Florida.

Last Updated - September 14, 2006

Litigation Landscape

1999 – Present:

Industry loses a number of individual suits, as well as the Engle class action in Florida, which was overturned on appeal.
Track record on individual, class-action and third-party cases remains good.
Several foreign governments file medical cost recovery cases that are either rejected or dismissed.
DOJ lawsuit seeks reimbursement for costs the U.S. government allegedly paid to treat smoking-related diseases in Medicaid patients.

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