Reply Brief — Philip Morris USA Inc., et al., Petitioners v. Richard Boatright, et ux.

No. 18-654

IN THE

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_______________

PHILIP MORRIS USA INC. AND LIGGETT GROUP LLC,

Petitioners,

v.

RICHARD BOATRIGHT AND DEBORAH BOATRIGHT,

Respondents.

_______________

On Petition For A Writ Of Certiorari

To The Florida Second District Court Of Appeal

_______________

REPLY BRIEF FOR PETITIONERS

_______________

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.

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.

DENIALS OF CERTIORARI IN OTHER

CASES DO NOT PRECLUDE REVIEW ................. 3

II.

PETITIONERS DID NOT WAIVE THE DUEPROCESS ISSUE ................................................ 6

III. A MERE “OPPORTUNITY TO BE HEARD”

DOES NOT SATISFY DUE PROCESS ................... 8

IV. THIS CASE PRESENTS SIGNIFICANT AND

RECURRING QUESTIONS ................................ 10

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

iii

TABLE OF AUTHORITIES

Page(s)

Cases

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

576 F. Supp. 2d 1328 (M.D. Fla. 2008) ................. 4

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

884 F.3d 1068 (11th Cir. 2018) .......................... 1, 6

Caldwell v. Mississippi,

472 U.S. 320 (1985) ................................................ 7

Fayerweather v. Ritch,

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

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

857 F.3d 1169 (11th Cir. 2017) ...................... 1, 4, 6

Gundy v. United States,

138 S. Ct. 1260 (2018) ............................................ 3

Honda Motor Co. v. Oberg,

512 U.S. 415 (1994) .............................................. 10

Lorillard Tobacco Co. v. Alexander,

123 So. 3d 67 (Fla. Dist. Ct. App. 2013) .............. 10

Philip Morris USA, Inc. v. Douglas,

110 So. 3d 419 (Fla. 2013) ............... 2, 3, 6, 7, 9, 10

Philip Morris USA, Inc. v. Ledoux,

230 So. 3d 530 (Fla. Dist. Ct. App. 2017) ............ 10

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

70 So. 3d 707 (Fla. Dist. Ct. App. 2011) ................ 4

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

53 So. 3d 1060 (Fla. Dist. Ct. App. 2010) ............ 10

Richards v. Jefferson Cty.,

517 U.S. 793 (1996) ................................................ 8

iv

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

902 F.3d 1342 (11th Cir. 2018) ...................... 4, 5, 6

Stanley v. Illinois,

405 U.S. 645 (1972) .............................................. 11

Taylor v. Sturgell,

553 U.S. 880 (2008) ................................................ 7

Teague v. Lane,

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

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

734 F.3d 1278 (11th Cir. 2013) .............................. 9

REPLY BRIEF FOR PETITIONERS

Respondents do not dispute that the Florida

courts permitted them to use the Engle findings to establish the tortious-conduct elements of their claims

and secure a $35 million verdict without showing that

any finder of fact—in this case or in Engle—actually

decided those elements against petitioners. According

to respondents, the Court should simply turn a blind

eye to this fundamental due-process violation, which

has already infected scores of verdicts and threatens

to taint several thousand more unless this Court intervenes, 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.

Contrary to respondents’ assertion that “[n]othing has

changed since” those prior denials of review, Opp. 2,

this is the first petition to seek review of an Engle

progeny case arising out of a Florida state court since

the Eleventh Circuit’s decisions in Graham v. R.J.

Reynolds Tobacco Co., 857 F.3d 1169 (11th Cir. 2017)

(en banc), and Burkhart v. R.J. Reynolds Tobacco Co.,

884 F.3d 1068 (11th Cir. 2018), which definitively reject all aspects of the Engle defendants’ due-process

arguments and make clear that the Eleventh Circuit

has joined the Florida Supreme Court in jettisoning

the “actually decided” requirement in favor of an “opportunity to be heard” standard. This Court is now all

that stands between the Engle defendants and the

replication of this constitutional error in each of the

remaining Engle progeny cases.

2

Respondents’ attempt to downplay the significance of the question presented—asserting that only

a “few plaintiffs remain to litigate against Petitioners,” Opp. 2—blinks reality. In fact, approximately

2,300 Engle progeny cases remain pending in Florida

courts, each seeking millions of dollars in damages

and each squarely implicating the same due-process

issue presented here. And 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. Thus, far from

“dwindling,” id. at 10, the financial implications of the

question presented are already staggering and

quickly increasing.

Respondents’ assertion (at 15) that petitioners

“did not preserve” their due-process argument fares

no better. Petitioners raised that argument in every

court below, see Pet. 15-17, and the Florida Second

District Court of Appeal expressly passed on the merits of the issue, concluding that “the acceptance of the

Phase I Engle findings as res judicata does not violate

the Engle defendants’ right to due process,” Pet. App.

14a (citing Philip Morris USA, Inc. v. Douglas, 110 So.

3d 419, 436 (Fla. 2013)). The constitutionality of the

unorthodox preclusion standard adopted in Douglas

and applied in this case is therefore squarely presented for this Court’s review.

Ultimately, respondents are left trying to defend

Douglas’s holding—now fully embraced by the Eleventh Circuit—that permitting plaintiffs to invoke the

Engle findings to establish elements of their claims

3

does not violate due process because the Engle defendants had an “opportunity to be heard.” Opp. 12 (citing

Douglas, 110 So. 3d at 429-31). 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 due-process precedents, and simple common sense. See Pet. 19-23. 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 that “might . . . have

been” decided by the Engle jury, Douglas, 110 So. 3d

at 433 (internal quotation marks omitted), are no less

arbitrary, unfair, and unconstitutional.

I.

DENIALS OF CERTIORARI IN OTHER CASES DO

NOT PRECLUDE REVIEW.

Respondents reiterate again and again that this

Court has denied certiorari in other Engle progeny

cases. 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 omitted), a prior denial in no way suggests that the question presented does not warrant review in a subsequent case. Last Term, for example, 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

4

question presented, see U.S. Br. in Opp. at 20-22,

Gundy, No. 17-6086 (Dec. 18, 2017), 2017 WL

8132119.

Nor does the “unanimous precedent” rejecting petitioners’ due-process argument foreclose review here,

Opp. 2—just as it did not foreclose review in Gundy,

see U.S. Br. in Opp. at 21, Gundy (emphasizing that

“[e]very court of appeals” to address the petitioner’s

argument had “rejected it”). Indeed, both state and

federal judges have repeatedly raised constitutional

concerns about affording far-reaching preclusive effect to the Phase I 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 because the findings are “equivalent to saying that the

Defendants did something wrong without saying exactly what the Defendants did wrong and when”), vacated on other grounds, 611 F.3d 1324 (11th Cir.

2010).

Moreover, several judges on the Eleventh Circuit

remain uneasy with giving preclusive effect to the

Engle findings even though that court has now conclusively endorsed Florida’s novel preclusion doctrine.

When the en banc court rejected petitioners’ due-process challenge to the preclusive effect of the defect and

negligence findings, three judges wrote separately in

dissent, including a 227-page opinion by Judge Tjoflat

that exhaustively catalogued the “judicial error committed by numerous state and federal courts.” Graham, 857 F.3d at 1214. And in Searcy v. R.J. Reynolds

5

Tobacco Co., 902 F.3d 1342 (11th Cir. 2018), an Eleventh Circuit panel exhibited substantial reservations

about giving preclusive effect to the concealment and

conspiracy findings, requesting extensive supplemental briefing on the issue before reluctantly concluding that it was “bound” to give preclusive effect to

those findings by the decision of a different Eleventh

Circuit panel in Burkhart—even though the Searcy

panel was “unable to discern” whether the Engle jury

“actually decided” anything about the specific theory

of concealment at issue, id. at 1353-54.

Respondents halfheartedly criticize petitioners for

choosing “not to seek review of Burkhart,” Opp. 13,

but petitioners’ decision to await the outcome of the

long-pending Searcy case before seeking review was

eminently reasonable and does not make the due-process issue any less cert-worthy. Nor does it change

the fact that this is the first state-court case in which

the Engle defendants have sought review since the

Eleventh Circuit in Graham, Burkhart, and Searcy

joined the Florida Supreme Court in Douglas by definitively rejecting all facets of their due-process argument. Now that the Eleventh Circuit has slammed

the door on any possible relief, this Court is the only

forum in which the Engle defendants can vindicate

their due-process rights.

Respondents attempt to diminish the significance

of the Eleventh Circuit’s recent opinions in Burkhart

and Searcy by emphasizing that petitioners “have

long-treated the arguments for the fraud findings and

the defect/negligence findings as the same.” Opp. 13.

That is true for litigation in state court, where Douglas’s claim-preclusion reasoning—that the preclusive

effect of the Engle findings extends to any issue

“which might . . . have been” decided by the Engle

6

jury—unambiguously applies to all of the findings.

110 So. 3d at 433 (internal quotation marks omitted).

But that is not true in federal court, where the Eleventh Circuit in Graham “review[ed]” the “Engle trial

record” in an attempt to determine what the Engle

jury actually decided as the basis for its defect and

negligence findings, but performed no similar record

review for the concealment and conspiracy findings,

which were not at issue in that case. 857 F.3d at 1182.

In Burkhart and Searcy, however, the Eleventh Circuit abandoned this record-based approach and instead adopted the Florida Supreme Court’s reasoning

in Douglas that, no matter what the Engle jury actually decided, “due process is satisfied so long as the

defendants had notice and an opportunity to be heard

on the claims at issue.” Searcy, 902 F.3d at 1353 (citing Burkhart, 884 F.3d at 1092).

Because the Florida Supreme Court and Eleventh

Circuit have now squarely embraced the same dueprocess reasoning, the petitions in both this case and

Searcy present the Court with a clean legal question

that applies to all of the Engle findings and every

progeny case that remains to be tried: whether due

process is violated by a rule of preclusion that gives

preclusive effect to any issue that might have been decided by a prior jury merely because the defendant

had an opportunity to be heard in that prior proceeding.

II. PETITIONERS DID NOT WAIVE THE DUE-PROCESS ISSUE.

The record resoundingly refutes respondents’ assertion that petitioners “did not preserve” the due-process issue. Opp. 15. Petitioners raised their due-process argument in every court below, see Pet. 15-17,

and none of those courts as much as hinted that the

7

argument was waived. That ends the matter: Only

when a state court “clearly and expressly” relies on

waiver as an independent basis for its disposition is

there a jurisdictional barrier to this Court’s review of

a federal question. Caldwell v. Mississippi, 472 U.S.

320, 327 (1985) (internal quotation marks omitted).

Far from unambiguously identifying a state procedural barrier to review, the Second District Court of

Appeal expressly rejected petitioners’ due-process argument on the merits based on the controlling precedential force of Douglas. See Pet. App. 14a.

Respondents’ other procedural argument—that

petitioners failed to submit a “feasible alternative verdict form” during the Engle trial, Opp. 7—is both factually wrong and legally irrelevant. It is factually

wrong because the Engle defendants proposed a verdict form that would have required the jury to identify

“specific defects and tortious actions,” but “the trial

court rejected it.” Douglas, 110 So. 3d at 423. And it

is legally irrelevant because petitioners are not challenging the adequacy of the Engle verdict form; they

are challenging the expansive preclusive effect the

Florida courts have given to the jury findings reflected

on that form. Because the burden of establishing preclusion always rests on the party invoking it, see Taylor v. Sturgell, 553 U.S. 880, 907 (2008), the Engle

class—not the defendants—bore the burden of proposing a verdict form that would be useful to the class

members in subsequent individual suits. Respondents cite no case for the extraordinary proposition that

defendants are legally obligated to ensure that verdict

forms are specific enough to aid their opponents in future litigation.

Nor were the defendants’ statements to the Engle

trial court inconsistent with petitioners’ position here.

8

The Engle defendants never suggested that the jury’s

“verdict would enable ‘other class members, however

many thousands or hundreds of thousands it may be

. . . [to] recover.’” Opp. 7-8 (alterations in original)

(quoting Engle Tr. 388878, 38896-97). Respondents

literally invent that statement by stitching together

the word “recover” with an unrelated statement nineteen pages earlier in the Engle trial transcript. And

the Engle defendants’ statement that, “if the jury answers ‘no . . . then not a single Florida smoker can recover,’” id. at 7 (alteration in original) (quoting Engle Tr. 36007), simply reflects that a “no” response would necessarily have meant that the jury

had rejected all of the class’s alternative theories of

liability. A “yes” response, in contrast, provides no indication about which theories the jury accepted, which

it rejected, and which it declined to reach.

Finally, respondents falsely claim that this case

“does not even include excerpts from the record of the

[Engle] class proceedings.” Opp. 17. In reality, a DVD

containing Engle record materials—which petitioners

filed with their motion for a directed verdict—is part

of the record. R.14768. In any event, no review of the

Engle record is necessary to conclude that the Florida

Supreme Court’s heretofore-unknown rule of “offensive claim preclusion” is an “extreme application[ ] of

the doctrine of res judicata” that violates due process.

Richards v. Jefferson Cty., 517 U.S. 793, 797 (1996).

III. A MERE “OPPORTUNITY TO BE HEARD” DOES

NOT SATISFY DUE PROCESS.

According to respondents, due process requires no

more than that “Petitioners have the opportunity to

litigate their case.” Opp. 21. But as this Court explained long ago—in an opinion respondents altogether ignore—due process prohibits a plaintiff from

9

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. 19-23. Although petitioners may have had an opportunity to litigate the conduct elements of respondents’ claims in Engle, that opportunity is insufficient

to satisfy due process because, in light of the highly

generalized Engle verdict form and the multiplicity of

theories pursued by the class, there is no way to know

whether the jury actually decided those issues in respondents’ favor.

Respondents counter that “the purpose of Phase I

was to address claims of misconduct that applied to

every member of the class.” Opp. 17. 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 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.

28-31. It was for this reason that the Florida Supreme

Court adopted its novel form of preclusion. The court

10

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)—a

previously unknown approach to preclusion that is

certain to foster precisely the type of “arbitrary and

inaccurate” outcomes that due process prohibits,

Honda Motor Co. v. Oberg, 512 U.S. 415, 430-31

(1994).

IV. THIS CASE PRESENTS SIGNIFICANT AND RECURRING QUESTIONS.

Respondents seek to diminish the significance of

this case by arguing that “[o]nly about 1 percent” of

the Engle class ever filed individual claims and only a

“few” of those cases remain. Opp. 2. But the original

class was huge: The 1% filing rate thus equated to

nearly 8,000 individual lawsuits, see id. at 9-10, more

than 2,300 of which remain pending in Florida courts.

And although fewer than 300 cases have been tried,

id. at 10, large verdicts like the $35 million verdict in

this case are not uncommon.1 In fact, the Engle defendants have already paid nearly $1 billion in judgments—each one tainted by the same constitutional

error.

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

1 See, e.g., Philip Morris USA, Inc. v. Ledoux, 230 So. 3d 530,

541 (Fla. Dist. Ct. App. 2017) (affirming $35 million verdict); Lorillard Tobacco Co. v. Alexander, 123 So. 3d 67, 83 (Fla. Dist. Ct.

App. 2013) ($33 million); R.J. Reynolds Tobacco Co. v. Martin, 53

So. 3d 1060, 1073 (Fla. Dist. Ct. App. 2010) ($28.3 million).

11

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.

Finally, respondents exaggerate the inefficiencies

that would result if progeny plaintiffs were required

to prove each element of their claims instead of relying on the Engle findings. Opp. 22. Most progeny

plaintiffs already present substantial evidence of defendants’ conduct in an attempt to establish entitlement to punitive damages; the trial in this case, for

example, lasted “almost a month” and generated “a

record in excess of 70,000 pages.” Id. at 10-11. In any

event, the pragmatic goal of reducing burdens on

plaintiffs cannot displace the constitutional mandates

of due process. The Due Process Clause was specifically “designed to protect [against] . . . the overbearing

concern for efficiency and efficacy” that was the driving force behind the Florida Supreme Court’s decision

to afford sweeping preclusive effect to the Engle findings. Stanley v. Illinois, 405 U.S. 645, 656 (1972).

CONCLUSION

The Court should grant the petition for a writ of

certiorari along with the petition in R.J. Reynolds Tobacco Co. v. Searcy, No. 18-649.

12

Respectfully submitted.

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.

KAREN H. CURTIS

CLARKE SILVERGLATE, P.A.

799 Brickell Plaza

Suite 900

Miami, FL 33131

(305) 377-0700

Counsel for Petitioner

Liggett Group LLC

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.

KELLY ANNE LUTHER

ANN M. ST. PETER-GRIFFITH

KASOWITZ BENSON

TORRES LLP

1441 Brickell Avenue

Suite 1420

Miami, FL 33131

(305) 377-1666

Counsel for Petitioner

Liggett Group LLC

February 5, 2019