Reply Brief — R.J. Reynolds Tobacco Company, et al., Petitioners v. Cheryl Searcy, as Personal Representative of the Estate of Carol LaSard

No. 18-649

IN THE

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_______________

R.J. REYNOLDS TOBACCO COMPANY AND

PHILIP MORRIS USA INC.,

Petitioners,

v.

CHERYL SEARCY, AS PERSONAL REPRESENTATIVE OF

THE ESTATE OF CAROL LASARD,

Respondent.

_______________

On Petition For A Writ Of Certiorari

To The United States Court Of Appeals

For The Eleventh Circuit

_______________

REPLY BRIEF FOR PETITIONERS

_______________

MICHAEL A. CARVIN

YAAKOV ROTH

JONES DAY

51 Louisiana Avenue, N.W.

Washington, D.C. 20001

Counsel for Petitioner

R.J. Reynolds Tobacco Co.

MIGUEL A. ESTRADA

Counsel of Record

AMIR C. TAYRANI

BRANDON L. BOXLER

GIBSON, DUNN & CRUTCHER LLP

1050 Connecticut Avenue, N.W.

Washington, D.C. 20036

(202) 955-8500

mestrada@gibsondunn.com

Counsel for Petitioner

Philip Morris USA Inc.

[Additional counsel listed on signature page]

RULE 29.6 STATEMENT

The corporate disclosure statement included in

the petition for a writ of certiorari remains accurate.

ii

TABLE OF CONTENTS

Page

RULE 29.6 STATEMENT ............................................i

TABLE OF AUTHORITIES ...................................... iii

REPLY BRIEF FOR PETITIONERS ......................... 1

I.

RESPONDENT’S PROCEDURAL ARGUMENTS

ARE BASELESS.................................................. 3

II. THERE IS NO WAY TO TELL WHETHER

ANY JURY HAS ACTUALLY DECIDED ALL

ELEMENTS OF RESPONDENT’S CLAIMS ............. 6

III. A MERE “OPPORTUNITY TO BE HEARD”

DOES NOT SATISFY DUE PROCESS.................... 9

IV. THIS CASE PRESENTS SIGNIFICANT AND

RECURRING QUESTIONS ................................. 11

CONCLUSION .......................................................... 11

iii

TABLE OF AUTHORITIES

Page(s)

Cases

Blonder-Tongue Labs., Inc. v. Univ. of

Ill. Found.,

402 U.S. 313 (1971) .............................................. 10

Brown v. R.J. Reynolds Tobacco Co.,

576 F. Supp. 2d 1328 (M.D. Fla. 2008) ................. 5

Burkhart v. R.J. Reynolds Tobacco Co.,

884 F.3d 1068 (11th Cir. 2018) .............................. 1

Christie v. NCAA,

573 U.S. 931 (2014) ................................................ 4

Fayerweather v. Ritch,

195 U.S. 276 (1904) ................................................ 9

Graham v. R.J. Reynolds Tobacco Co.,

857 F.3d 1169 (11th Cir. 2017) .............................. 2

Gundy v. United States,

138 S. Ct. 1260 (2018) ............................................ 4

Hansberry v. Lee,

311 U.S. 32 (1940) ............................................ 9, 10

Honda Motor Co. v. Oberg,

512 U.S. 415 (1994) .............................................. 11

Kremer v. Chem. Constr. Corp.,

456 U.S. 461 (1982) ................................................ 4

Murphy v. NCAA,

138 S. Ct. 1461 (2018) ............................................ 4

Parklane Hosiery Co. v. Shore,

439 U.S. 322 (1979) .............................................. 10

iv

Philip Morris USA, Inc. v. Douglas,

110 So. 3d 419 (Fla. 2013) ......................... 4, 5, 6, 7

R.J. Reynolds Tobacco Co. v. Brown,

70 So. 3d 707 (Fla. Dist. Ct. App.

2011) ....................................................................... 5

Richards v. Jefferson Cty.,

517 U.S. 793 (1996) .............................................. 11

Royal v. Murphy,

138 S. Ct. 2026 (2018) ............................................ 5

Sturgeon v. Frost,

138 S. Ct. 2648 (2018) ............................................ 5

Taylor v. Sturgell,

553 U.S. 880 (2008) .............................................. 10

Teague v. Lane,

489 U.S. 288 (1989) ................................................ 3

Walker v. R.J. Reynolds Tobacco Co.,

734 F.3d 1278 (11th Cir. 2013) .............................. 6

REPLY BRIEF FOR PETITIONERS

Respondent does not dispute that the Eleventh

Circuit upheld her use of the Engle findings to establish the tortious-conduct elements of her concealment

and conspiracy claims simply because petitioners “had

notice and an opportunity to be heard regarding those

claims” in Engle—even though the Eleventh Circuit

was “unable to discern what the [Engle] jury actually

decided in making its findings on those claims.” Pet.

App. 19a. That holding warrants this Court’s review

because its legal error is egregious and its consequences are enormous.

According to respondent, however, the Court

should turn a blind eye to the shortcomings in the

Eleventh Circuit’s due-process analysis because this

Court has denied review of prior Engle progeny cases.

But those denials of certiorari—most of which involved “hold” petitions rather than requests for plenary review—are no reason for this Court to countenance the ongoing deprivation of petitioners’ due-process rights through the application of the Florida Supreme Court’s unprecedented preclusion standard.

Those prior denials of review do not render the “[p]etition procedurally improper” or operate as “law of the

case.” Opp. 16. And much has changed since those

prior denials: Although prior Eleventh Circuit decisions (erroneously) concluded that the Engle jury had

actually decided the precise issues given preclusive effect in those cases, its subsequent decisions in

Burkhart v. R.J. Reynolds Tobacco Co., 884 F.3d 1068

(11th Cir. 2018), and in this case make clear that the

Eleventh Circuit has now definitively rejected the “actually decided” requirement in favor of an “opportunity to be heard” due-process standard. This Court

is now all that stands between the Engle defendants

2

and the application of the Florida Supreme Court’s

constitutionally flawed version of claim preclusion in

each of the remaining Engle progeny cases.

Respondent’s attempt to downplay the significance of the question presented—asserting that the

question “implicate[s] only the six remaining cases

pending in federal court,” Opp. 1-2—has no footing in

reality. Approximately 2,300 Engle progeny cases remain pending in Florida state court, each seeking millions of dollars in damages and each squarely implicating the same due-process issue presented here. Respondent also cherry-picks a few progeny cases with

relatively small damages awards, see id., but those

outliers do not tell the full story. Although fewer than

300 progeny cases have been tried to verdict, the

Engle defendants have already paid more than

$800 million in judgments. That number will increase

dramatically if this Court denies certiorari here: The

nine progeny cases now pending before the Court involve judgments totaling more than $150 million.

Nor can respondent evade the question presented

by suggesting that the concealment and conspiracy

findings rest on “across-the-board conduct” that applies to all class members. Opp. 21. That may have

been a reason to deny review in Graham v. R.J. Reynolds Tobacco Co., 857 F.3d 1169 (11th Cir. 2017) (en

banc)—where the court “review[ed] the Engle trial

record” to make its own determination that the jury’s

defect and negligence findings supposedly rest on the

ground that all cigarettes cause disease and are addictive, id. at 1182—but it is not the case with respect to

the Eleventh Circuit’s treatment of the concealment

and conspiracy findings. Indeed, the panel in this case

went so far as to “assume that the Engle jury did not

3

actually decide” issues relevant to Ms. LaSard’s smoking history. Pet. App. 17a. Bound by the earlier decision in Burkhart, however, the panel was compelled to

uphold the verdict. Id. at 18a.

Respondent is therefore left trying to defend the

Eleventh Circuit’s “opportunity to be heard” reasoning. Opp. 28. But a mere “opportunity to be heard” is

not a constitutionally adequate basis to give preclusive effect to a prior jury’s findings, as confirmed by

centuries of common-law authority, this Court’s dueprocess precedents, and simple common sense. See

Pet. 20-24. No one—except perhaps the Engle plaintiffs and the Florida courts—would say that a State

has satisfied due process by giving defendants an opportunity to defend themselves at trial but then treating every issue as resolved against the defendants in

subsequent proceedings as long as the first jury decided at least one issue in the plaintiffs’ favor. Engle

progeny judgments produced by giving preclusive effect to every issue on which the defendants had an “opportunity to be heard” in Engle, Pet. App. 18a, are no

less arbitrary, unfair, and unconstitutional.

I.

RESPONDENT’S PROCEDURAL ARGUMENTS ARE

BASELESS.

Respondent repeatedly emphasizes that this

Court has denied review of other progeny cases and

suggests that those denials somehow preclude review

here. See, e.g., Opp. 13-15. As this Court has “often

stated,” however, the “‘denial of a writ of certiorari imports no expression of opinion upon the merits of the

case.’” Teague v. Lane, 489 U.S. 288, 296 (1989).

Given the “variety of considerations that underlie denials of the writ,” id. (internal quotation marks omit-

4

ted), a prior denial in no way suggests that the question presented does not warrant review in a subsequent case.

Indeed, just last Term, the Court granted review

in Gundy v. United States, 138 S. Ct. 1260 (2018), even

though the Court previously had declined—more than

a dozen times—to review the same question presented, see U.S. Br. in Opp. at 20-22, Gundy, No. 176086 (Dec. 18, 2017), 2017 WL 8132119. And two

Terms ago, the Court granted review in Murphy v.

NCAA, 138 S. Ct. 1461 (2018), even though the Court

had previously denied review of the same question in

a petition filed by the same petitioner in the same litigation, see Christie v. NCAA, 573 U.S. 931 (2014).

Respondent is also wrong in characterizing this

petition as a “collateral attack” on the Florida Supreme Court’s judgment in Philip Morris USA, Inc. v.

Douglas, 110 So. 3d 419 (Fla. 2013). Opp. 16-17. That

a decision in petitioners’ favor would have the effect of

rejecting the due-process standard applied by the

Florida Supreme Court in Douglas—while leaving the

judgment in favor of Mr. Douglas intact—hardly precludes this Court’s review of that question.

Respondent fares no better in arguing that the

Full Faith and Credit Act “require[s]” federal courts

“to ‘accept’” the sweeping preclusive effect that the

Florida Supreme Court has afforded the Engle findings. Opp. 17. The Full Faith and Credit Act does not

demand reflexive adherence to state law. To the contrary, federal courts must give full faith and credit to

a state-court judgment only where the state rules of

preclusion “satisfy the applicable requirements of the

Due Process Clause.” Kremer v. Chem. Constr. Corp.,

456 U.S. 461, 482 (1982). Florida’s novel rule of “of-

5

fensive claim preclusion”—which extends to every issue that “might . . . have been” decided by the Engle

jury, Douglas, 110 So. 3d at 433 (internal quotation

marks omitted)—is manifestly incompatible with due

process and thus not entitled to full faith and credit,

see Pet. 24-31.

Nor does the lack of a conflict between the Florida

Supreme Court and the Eleventh Circuit foreclose review. Opp. 19. This Term alone, the Court will be

deciding multiple cases in which it granted review of

important federal questions in the absence of a conflict among the lower courts, see, e.g., Sturgeon v.

Frost, 138 S. Ct. 2648 (2018); Royal v. Murphy, 138 S.

Ct. 2026 (2018), and at least one case in which all

eleven courts of appeals to address the petitioner’s argument had rejected it, see Gundy, 138 S. Ct. 1260.

Respondent’s “no conflict” argument also ignores

that both state and federal judges have repeatedly

raised constitutional concerns about affording farreaching preclusive effect to the Engle findings. See,

e.g., R.J. Reynolds Tobacco Co. v. Brown, 70 So. 3d

707, 718-20 (Fla. Dist. Ct. App. 2011) (May, J., specially concurring) (expressing “concern” about the

“constitutional issue hover[ing] over” progeny litigation); Brown v. R.J. Reynolds Tobacco Co., 576 F.

Supp. 2d 1328, 1342 (M.D. Fla. 2008) (concluding that

due process prevents plaintiffs from relying on the

Engle findings), vacated on other grounds, 611 F.3d

1324 (11th Cir. 2010). Indeed, several judges on the

Eleventh Circuit remain uneasy with giving preclusive effect to the Engle findings. When the en banc

court rejected petitioners’ due-process challenge to the

preclusive effect of the defect and negligence findings

in Graham, three judges wrote separately in dissent.

6

See Pet. 13. And the panel in this case exhibited substantial reservations about giving preclusive effect to

the concealment and conspiracy findings before reluctantly concluding that it was “bound” by Burkhart to

do so. Pet. App. 20a. Thus, scratching the surface of

the lower courts’ unanimity reveals serious doubts

about the constitutionality of the Florida Supreme

Court’s unprecedented approach to preclusion.

II. THERE IS NO WAY TO TELL WHETHER ANY JURY

HAS ACTUALLY DECIDED ALL ELEMENTS OF RESPONDENT’S CLAIMS.

In an attempt to avoid scrutiny of the Eleventh

Circuit’s “opportunity to be heard” reasoning, respondent contends that all “factual predicates for liability” in this case “were proven at trial in Engle,”

which supposedly culminated in findings about

“across-the-board conduct by the tobacco companies.”

Opp. 21-22. But both the Florida Supreme Court and

the Eleventh Circuit have rejected the notion that the

Engle jury actually decided all liability theories

against the defendants, which is precisely why those

courts have adopted the novel theory that the defendants can constitutionally be bound on issues not “actually decided” by that jury. The opinion below makes

this perfectly clear.

To be sure, the Engle class did pursue some classwide theories of liability. But, as the Florida Supreme

Court emphasized in Douglas, the class also pursued

theories that applied to only a subset of class members, such as allegations of “brand-specific defects” applicable to only some types of cigarettes during only

some periods of time. 110 So. 3d at 423; see also

Walker v. R.J. Reynolds Tobacco Co., 734 F.3d 1278,

1281 (11th Cir. 2013) (“In Phase I of the trial, the

plaintiffs presented evidence about some defects that

7

were specific to certain brands or types of cigarettes

and other defects common to all cigarettes.”).

Because “the class action jury was not asked . . .

to identify specific tortious actions” committed by the

defendants, Douglas, 110 So. 3d at 423, there is no

way to know which of these disparate theories the

Engle jury accepted in rendering its verdict, see Pet.

28-30. It was for this reason that the Florida Supreme

Court adopted its novel form of preclusion. The court

recognized that the Engle findings would be “useless

in individual actions” if plaintiffs were required to

show what the jury “actually decided.” Douglas, 110

So. 3d at 433. The court therefore attempted to salvage those findings by replacing the “actually decided”

requirement with a “might . . . have been” decided

standard, id. (internal quotation marks omitted),

which it deemed consistent with due process because

the Engle defendants had been afforded an “opportunity to be heard,” id. at 431.

The Eleventh Circuit has now embraced Douglas’s

stark violation of basic due-process rights. Like the

Florida Supreme Court in Douglas, the Eleventh Circuit panel in this case acknowledged that the Engle

class advanced “numerous theories of concealment,”

Pet. App. 12a, and that the Engle jury’s “general finding did not indicate which acts of concealment may

have underlain their finding versus which allegations

of concealment they might have rejected,” id. at 19a.

As a result, the court was compelled “to assume that

the Engle jury did not actually decide” that petitioners

fraudulently concealed information about the specific

low-tar cigarettes smoked by Ms. LaSard. Id. at 17a.

The court nevertheless permitted respondent to use

the Engle findings to establish that petitioners did en-

8

gage in concealment as to those low-tar cigarettes because, “for purposes of granting preclusion consistent

with the due process clause,” it is “enough” under the

Eleventh Circuit’s controlling decision in Burkhart

“that [petitioners] had a right to be heard” in Engle.

Id. at 19a.

Accordingly, every state and federal court in Florida now subscribes to the view that due process permits precluding the Engle defendants from disputing

any issue that was litigated in Engle, regardless of

whether the jury actually decided the issue in favor of

the class.1

Respondent further argues that it does not matter

what the Engle jury actually decided because “there

was ample independent evidence of Petitioners’ misconduct” introduced in this case. Opp. 25. Regardless

of the volume of evidence introduced at trial, however,

the jury in this case was not required to find that the

cigarettes smoked by Ms. LaSard contained a defect,

that petitioners’ conduct with respect to her was negligent, or that any tobacco-industry statements on

which she may have relied were fraudulent. As the

panel explained, if the jury found that Ms. LaSard was

an Engle class member, “the Engle jury findings took

care of the rest and established that Defendants had

acted tortiously.” Pet. App. 9a. The “independent evidence” introduced at trial therefore cannot compensate for the absence of any discernable finding by any

1 Respondent inaccurately characterizes petitioners’ due-process argument as attacking “the adequacy of [the] verdict form

in the Engle state court trial.” Opp. 25. The legal sufficiency of

the Engle verdict form to support the class jury’s findings is not

at issue here. The due-process question instead centers on the

preclusive effect that can be constitutionally afforded to those

findings in subsequent cases.

9

jury that respondent had proved the tortious-conduct

elements of her claims.

III. A MERE “OPPORTUNITY TO BE HEARD” DOES

NOT SATISFY DUE PROCESS.

According to respondent, “the Court has confined

the due process inquiry in the application of state preclusion law to the issues of notice and the opportunity

to be heard.” Opp. 28. But as this Court explained

long ago, due process prohibits a plaintiff from invoking preclusion to establish an element of her claim unless the defendant both “had an opportunity to present” the issue and “the question was decided” against

the defendant in the prior proceeding. Fayerweather

v. Ritch, 195 U.S. 276, 299 (1904); see also Pet. 21-24.

To belabor the obvious, liability for tortious conduct cannot be imposed on a defendant unless a jury

has decided the defendant is liable, and neither the

jury in this case nor the jury in Engle ascertainably

decided that petitioners fraudulently concealed information about the health effects of low-tar cigarettes.

Holding petitioners liable absent such a finding violates due process, and that violation is in no way ameliorated because petitioners had an opportunity to

raise that issue before liability was imposed. In short,

although petitioners may have had an opportunity to

litigate the conduct elements of respondent’s claims in

Engle, that opportunity is insufficient to satisfy due

process because, in light of the highly generalized

Engle verdict form, there is no way to know whether

the jury actually decided those issues in respondent’s

favor.

Respondent urges the Court to ignore Fayerweather as “a long-forgotten scrap of dicta,” Opp. 28,

and instead follow Hansberry v. Lee, 311 U.S. 32

10

(1940), and subsequent cases that have applied an

“opportunity to be heard” standard to determine the

constitutionality of a preclusion rule. See Opp. 27-28.

But the basic principle that liability must be decided

before it is imposed is hardly obscure dicta; it is a selfevident truism about the basic requirements of due

process. None of the cases cited by respondent undermines this fundamental due-process principle. In

Hansberry, for example, the Court held that a finding

from an earlier lawsuit could not be given preclusive

effect because the defendants against whom preclusion was invoked were not adequately represented in

the prior proceeding. 311 U.S. at 46. This establishes

that a prior verdict is prospectively binding only if

there is both a prior finding actually deciding the precluded issue and an opportunity to be heard before

that prior finding is made; it hardly suggests that a

defendant can be found liable absent the requisite

prior finding. Respondent’s other cases are equally inapposite. See Parklane Hosiery Co. v. Shore, 439 U.S.

322, 332-33 (1979) (addressing whether mutuality is

a prerequisite to offensive collateral estoppel);

Blonder-Tongue Labs., Inc. v. Univ. of Ill. Found., 402

U.S. 313, 350 (1971) (addressing whether mutuality is

a prerequisite to defensive collateral estoppel).

Thus, nothing in Hansberry or any of this Court’s

other cases calls into question Fayerweather’s dueprocess holding or the centuries of common-law authority establishing that an issue must have been “actually litigated and resolved” in a prior proceeding in

order for preclusion to apply. Taylor v. Sturgell, 553

U.S. 880, 892 (2008) (internal quotation marks omitted; emphasis added); see also Pet. 21-23.

11

IV. THIS CASE PRESENTS SIGNIFICANT AND RECURRING QUESTIONS.

Respondent contends that the question presented

affects only a handful of lawsuits because the “Eleventh Circuit is addressing the tail end of the few remaining appeals” in Engle progeny cases. Opp. 19.

Although progeny litigation in federal court may be

nearing an end, the due-process question presented in

this case is also directly at issue in each of the more

than 2,300 progeny suits that are still pending in state

court. The financial stakes are therefore enormous—

Engle defendants have already paid nearly $1 billion

in judgments—and far exceed the stakes in other

cases in which this Court has intervened to prevent

extreme departures from settled procedural norms.

See, e.g., Richards v. Jefferson Cty., 517 U.S. 793, 795

(1996); Honda Motor Co. v. Oberg, 512 U.S. 415, 418

(1994).

Moreover, the importance of the question presented extends beyond Engle progeny cases, as more

and more courts are turning to “generic, aggregate

trial proceedings” in an attempt to enhance judicial

efficiency. Chamber Br. 20-21. Granting certiorari

would allow the Court to clarify the due-process limits

on these bespoke procedural innovations that rely on

the combination of expansive preclusion doctrines and

broadly defined issues classes to foster precisely the

type of “arbitrary and inaccurate” outcomes that due

process prohibits. Oberg, 512 U.S. at 430-31.

CONCLUSION

The Court should grant the petition for a writ of

certiorari along with the petition in Philip Morris

USA Inc. v. Boatright, No. 18-654.

12

Respectfully submitted.

MICHAEL A. CARVIN

YAAKOV ROTH

JONES DAY

51 Louisiana Avenue, N.W.

Washington, D.C. 20001

Counsel for Petitioner

R.J. Reynolds Tobacco Co.

MIGUEL A. ESTRADA

Counsel of Record

AMIR C. TAYRANI

BRANDON L. BOXLER

GIBSON, DUNN & CRUTCHER LLP

1050 Connecticut Avenue, N.W.

Washington, D.C. 20036

(202) 955-8500

mestrada@gibsondunn.com

ANDREW L. FREY

LAUREN R. GOLDMAN

MAYER BROWN LLP

1221 Avenue of the Americas

New York, NY 10020

(212) 506-2500

Counsel for Petitioner

Philip Morris USA Inc.

February 5, 2019