Appendix — Cipollone v. Liggett Group, Inc.

Supreme Court, U.S.

FILED

2 DEC 28 1999

No. NIOL, JR.

CLERK

In The

Supreme Court of the United States

—_

October Term, 1990

THOMAS CIPOLLONE, individually and as Executor of the

Estate of Rose D. Cipollone,

Petitioner,

VS.

LIGGETT GROUP, INC., a Delaware Corporation; PHILIP

MORRIS INCORPORATED, a Virginia Corporation; and

LOEW’S THEATRES, INC., a New York Corporation,

Respondents.

APPENDIX

BUDD LARNER GROSS PICILLO

ROSENBAUM GREENBERG & SADE, P.C.

Attorneys for Petitioner

150 John F. Kennedy Parkway, CN 1000

Short Hills, New Jersey 07078-0999

(201) 379-4800

11458

tz * NJ (201) 257-6850¢(800) 3 APPEAL *NY (212) 840-4640°MA (617) 542-1114

Prete ine. DC (202) 783-7288°PA (215) 925-6500*USA (800) 5 APPEAL

TABLE OF CONTENTS

Appendix A — Opinion of the United States Court of

Appeals for the Third Circuit Dated January 5, 1990

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Appendix B — Supreme Court Denial of Certiorari Dated

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Appendix C — Opinion of the United States Court of

Appeals, Third Circuit Dated April 7, 1986......

Appendix D — Opinion of the United States District

Court, District of New Jersey Dated September 20,

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Appendix F — Related Case in Conflict with Cipollone:

Forster, et al. v. R.J. Reynolds Tobacco Co., et al.

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Appendix G — Related Case in Conflict with Cipollone;

Dewey et al. v. R.J. Reynolds Tobacco Co., et al.

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Appendix H — Front Page of Article ‘‘Cigaret Cancer

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APPENDIX A — OPINION OF THE UNITED STATES

COURT OF APPEALS FOR THE THIRD CIRCUIT DATED

JANUARY 5, 1990

Antonio CIPOLLONE, individually and as Executor of the Estate

of Rose D. Cipollone,

v.

LIGGETT GROUP, INC., a Delaware Corporation; Philip Morris

Incorporated, A Virginia Corporation, and Lorillard, Inc., A New

York Corporation.

Appeal of PHILIP MORRIS, INC.

Appeal of LORILLARD, INC.

Appeal of LIGGETT GROUP, INC.

Nos. 88-5732, 88-5570, 88-5771, 88-5784.

United States Court of Appeals,

Third Circuit.

Argued March 28, 1989.

Decided Jan. 5, 1990.

Marc Z. Edell (argued), Cynthia A. Walters, Budd Larner

Gross Picillo Rosenbaum Greenberg & Sade, P.C., Short Hills,

N.J., Alan M. Darnell, Wilentz, Goldman & Spitzer, Woodbridge,

N.J., for appellant Antonio Cipollone.

Thomas E. Silfen (argued), Brown & Connery, Westmont,

N.J., Arnold & Porter, Washington, D.C., Shook, Hardy &

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Appendix A

Bacon, Kansas City, Mo., for appellant Philip Morris, Inc.

Robert E. Northrip (argued), Rhonda E. Fawcett, W. Edward

Reeves, Shook, Hardy & Bacon, Kansas City, Mo., William S.

Tucker, Jr., Stryker, Tams & Dill, Newark, N.J., for appellant

Lorillard, Inc.

Donald J. Cohn (argued), James V. Kearney, Webster &

Sheffield, New York City, Alan S. Naar, Greenbaum, Rowe,

Smith, Ravin, Davis & Bergstein, Woodbridge, N.J., for appellant

Liggett Group, Inc.

Before GIBBONS, Chief Judge, BECKER and NYGAARD,

Circuit Judges.

OPINION OF THE COURT

BECKER, Circuit Judge.

I. INTRODUCTION

This appeal is from a final judgment in a protracted products

liability case in which the plaintiff, Antonio Cipollone, seeks to

hold Liggett Group, Inc., Lorillard, Inc., and Philip Morris, Inc.,

three of the leading firms in the tobacco industry, liable for the

death from lung cancer of his wife, Rose Cipollone, who smoked

cigarettes from 1942 until her death in 1984. Jurisdiction is founded

on diversity of citizenship, 28 U.S.C. § 1332, and New Jersey

law applies. In an earlier opinion in the case, Cipollone v. Liggett

Group, Inc., 789 F.2d 181 (3d Cir. 1986), cert. denied, 479 U.S.

1043, 107 S.Ct. 907, 93 L.Ed.2d 857 (1987), we held that the

Federal Cigarette Labeling and Advertising Act (‘‘Labeling Act’’),

15 U.S.C. §§ 1331-1340 (1982 & Supp. II 1984), which became

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Appendix A

effective January |, 1966, preempted claims arising from smoking

after January |, 1966 (hereinafter post-1965) based upon the

cigarette companies’ advertising or promotion of cigarettes or upon

the adequacy of their warnings as to the hazards of smoking.

Following that opinion, which stemmed from an interlocutory

appeal, see 28 U.S.C. § 1292(b), the case proceeded to a four-

month long trial. At the conclusion of the trial, the jury, answering

a series of special interrogatories, returned a verdict in the sum

of $400,000.00 for the plaintiff in his individual capacity on the

breach of express warranty claim. The jury also found the

defendants strictly liable for failing to warn adequately of the

hazards of their products, but returned a verdict in their favor

on that claim because of Mrs. Cipollone’s comparative fault. More

precisely, the jury apportioned 80% of the responsibility for Mrs.

Cipollone’s injuries to her because of its finding that she knew

and appreciated the damages of cigarette smoking and voluntarily

chose to smoke.

Both sides have appealed, raising a plethora of issues. The

prime defendant is Liggett Group, Inc. (‘‘Liggett’’), whose

cigarettes Mrs. Cipollone smoked from 1942 to 1968. The briefs

focus primarily on alleged errors in the district court’s charge

to the jury and on specific jury findings that may have preclusive

effect. Considerable attention was also devoted to ancillary issues:

the viability of the plaintiff’s generic risk-utility theory of liability

(the district court granted summary judgment for the defendants

thereon); the failure of the district court to award plaintiff

prejudgment interest; the district court’s grant to plaintiff of partial

summary judgment on defendants’ statute of limitations defense;

and the effect of our preemption decision on plaintiff’s intentional

tort claims (the district court held them to be preempted).

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Appendix A

The most problematic issue on this appeal lies in the skewing

effect on the trial of our interlocutory preemption decision, which

created an artificial (although legally binding) time constraint on

the determination of causation and liability. Under the aegis of

that decision, the jury was forbidden to consider the effect of

the defendants’ post-1965 conduct and, concomitantly, could only

consider whether a pre-1966 breach of warranty and failure to

warn was the proximate cause of Mrs. Cipollone’s smoking and

death. However, the district court allowed the jury to consider

Mrs. Cipollone’s post-1965 smoking, on the theory that her

post-1965 behavior was relevant to a comparative fault defense.

We conclude that the district court erred in permitting the

jury to make a comparative fault determination based on Mrs.

Cipollone’s post-1965 behavior. Rather, the jury should have been

instructed that Mrs. Cipollone’s post-1965 conduct bore only on

the apportionment of damages, but not on her comparative fault

for her own injuries. Although in some respects the fairest and

most natural approach would be to let the jury consider both

sides’ post-1965 conduct to the extent that it bears on

apportionment of damages, that result would impermissibly

impinge on the immunity from suit afforded the cigarette

companies by the Labeling Act. Still, permitting the defendants

to take advantage of Mrs. Cipollone’s post-1965 conduct to escape

liability altogether, particularly in the face of plaintiff’s allegations

that defendants engaged in post-1965 conduct designed to reassure

smokers, creates an unacceptable imbalance.

The only way to give effect to our preemption decision and

yet ensure fairness in the trial is to limit the evidence going to

Mrs. Cipollone’s comparative fault to her pre-1966 conduct. We

find this result to be consistent with, and indeed compelled by,

the New Jersey Supreme Court decision in Ostrowski v. Azzara,

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Appendix A

111 N.J. 429, 545 A.2d 148 (1988). Thus, Mr. Cipollone is entitled

to a new trial on his failure to warn claim.

Liggett’s appeal on the express warranty claim presents an

abstruse question about the nature of the reliance interest required

by U.C.C. section 2-313, N.J.S.A. § 12A:2-313. The attention

we pay to this issue on appeal is somewhat ironic, given that the

extensive trial focused on other theories of liability, particularly

strict liability. The jury’s verdict for the plaintiff on an express

warranty theory makes our analysis necessary, however.

We conclude that the express warranty charge was flawed

and that that portion of the verdict must also be set aside.

Primarily, the district court erred to the extent that it prevented

Liggett from proving, by a preponderance of the evidence, that

Mrs. Cipollone did not believe the advertisements. The

advertisements constitute an express warranty as long as they

constitute a basis of the bargain, that is, as long as Mr. Cipollone

can prove that Mrs. Cipollone was aware of the advertisements

and as long as Liggett does not prove that she disbelieved them.

We conclude that the district court did not err in barring

a comparative fault defense to the express warranty claim because,

on the facts of this case, it would have been impossible for Mrs.

Cipollone to have known of the dangers of smoking and still have

believed enough in Liggett’s advertisements for them to constitute

a warranty. In essence, the comparative fault issue collapses into

the basis of the bargain issue. We further conclude that the district

court did not err in denying Liggett’s motion for judgment n.o.v.,

because there was sufficient evidence in the record to support

conclusions that a warranty existed and was breached and that

breach of that warranty proximately caused Mrs. Cipollone’s

cancer.

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Appendix A

We reverse the district court’s grant of summary judgment

to defendants on plaintiff’s generic risk-utility claim. Although

our holding on this issue is subject to instant modification by

the New Jersey Supreme Court, which presently has the issue

- before it, we find that the district court improperly granted

defendant’s motion for a directed verdict. Thus, plaintiff still has

live claims against all three defendants in this case; although Mrs.

Cipollone did not smoke cigarettes made by Lorillard and Philip

Morris until after 1965 (hence absolving them from liability on

the breach of express warranty and failure to warn claims), they

remain potentially liable on the risk-utility claim, which does not

implicate advertising, promotion or warnings. We also conclude

that if Mr. Cipollone prevails on an express warranty claim on

retrial, he is entitled to prejudgment interest. We reverse the district

court’s grant of partial summary judgment for the plaintiff on

the statute of limitations issue because we conclude that there

was a genuine issue of material fact as to whether, within the

meaning of the New Jersey discovery rule, Mrs. Cipollone should

have discovered the facts giving rise to her claim earlier. Finally,

we agree with the district court that plaintiff’s intentional tort

claim is preempted by our previous decision.

Il. THE RELEVANT FACTS ADDUCED AT TRIAL

Rose Cipollone was born in 1925 and began to smoke in 1942.

She smoked Chesterfield brand cigarettes, manufactured by

Liggett, until 1955. In her deposition, introduced into evidence

at the trial, she stated that she smoked the Chesterfield brand

to be ‘‘glamorous,’’ to “‘imitate’”’ the ‘‘pretty girls and movie stars’’

depicted in Chesterfield adverstisements, and because the

advertisements stated that Chesterfield cigarettes were ‘‘mild.’’

Mrs. Cipollone stated that she understood the description of

Chesterfield cigarettes as ‘‘mild’’ to mean that the cigarettes were

safe.

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Appendix A

Mrs. Cipollone also testified that she was an avid reader of

a variety of magazines, frequently listened to the radio, and often

watched television during the years that she smoked the

Chesterfield brand. Although she could not specifically remember

which Chesterfield advertisements she saw or heard during those

years, Chesterfield advertisements appeared continuously in those

media during that period. Several of these advertisements were

introduced into evidence. The following copy appeared commonly

in Chesterfield magazine advertisements during the year 1952:

PLAY SAFE Smoke Chesterfield.

NOSE, THROAT, and Accessory Organs not

Adversely Affected by Smoking Chesterfields. First

such report ever published about any cigarette. A

responsible consulting organization has reported

the results of a continuing study by a competent

medical specialist and his staff on the effects of

smoking Chesterfield cigarettes. A group of people

from various walks of life was organized to smoke

only Chesterfields. For six months this group of

men and women smoked their normal amount of

Chesterfields—10 to 40 a day. 45% of the group

have smoked Chesterfields continually from one

to thirty years for an average of 10 years each.

At the beginning and at the end of the six-months

period each smoker was given a thorough

examination, including X-ray pictures, by the

medical specialist and his assistants. The

examination covered the sinuses as well as the nose,

ears and throat. The medical specialist, after a

thorough examination of every member of the

group, stated: ‘‘It is my opinion that the ears, nose,

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Appendix A

throat and accessory organs of all participating

subjects examined by me were not adversely

affected in the six-month period by smoking the

cigarettes provided.’’

5 J.A. 21, 22 (c. 1952).' The defendants stipulated that Mrs.

Cipollone had seen many of these advertisements.

1. Chesterfield magazine advertisements during this period also contained

the following messages:

Chesterfield contains only ingredients that give you the Best

Possible Smoke—as tested and approved by scientists from

leading universities.

5 J.A. 21 (c. 1952).

[Chesterfield cigarettes contain) PURE, COSTLY

MOISTENING proved by over 40 years of continuous use

in U.S.A. tobacco products as entirely safe for use in the

mouth—chemically pure, far most costly glycerol and pure

sugars which are natural to tobacco—nothing else... .

Scientists from Leading Universitites Make Sure that

Chesterfield Contains Only Ingredients that Give You the Best

Possible Smoke.

5 J.A. 26 (c.1952).

AND NOW—CHESTERFIELD FIRST TO GIVE YOU

SCIENTIFIC FACTS IN SUPPORT OF SMOKING. A

responsible consulting organization reports a study by a

competent medical specialist and staff on the effects of

smoking Chesterfields. For six months a group of men and

women smoked only Chesterfield— 10 to 40 day—their normal

amount. 45 percent of the group have smoked Chesterfield

from one to thirty years for an average of ten years each.

(Cont’d)

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Appendix A

Television advertisements for the Chesterfield brand were also

introduced into evidence. The Chesterfield cigarette was described

as having ‘‘ingredients that make Chesterfield the best possible

smoke as tested and approved by scientists from ‘eading

universities,’’ 5 J.A. 37 (undated), and being manufactured with

**electronic miracle’’ technology that makes ‘‘cigarettes . . . more

better [sic] and safer for you.’’ 5 J.A. 39 (c. 1955). One

advertisement stated ‘‘[n]ow Chesterfield is the first cigarette to

present this scientific evidence on the effects of smoking—a

medical specialist making regular bi-monthly examinations of

group of people from various walks of life—45% of this group

have smoked Chesterfield’s for an average of over 10 years—

after 8 months, the medical specialist reports that he observed

no adverse effects to the nose, throat and sinuses of the group

who were smoking Chesterfield. I’d say that means real mildness.’’

5 J.A. 36 (undated).

Mrs. Cipollone testified that she frequenily listened to the

radio show ‘‘Arthur Godfrey and His Friends,’’ sponsored by

the Chesterfield brand. The Chesterfield brand was marketed on

the show as follows (text read by Mr. Godfrey):

(Cont’d)

At the beginning and end of the six-months, each smoker

was given a thorough examination including X-rays, and

yeovering the sinuses, nose, ears and throat. After these

examinations, the medical specialist stated ... ‘‘It is my

opinion that the ears, nose, throat and accessory organs of

all participating subjects examined by me were not adversely

affected in the six-months period by smoking the cigarettes

provided.’’

5 J.A. 23 (c. 1952).

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Appendix A

[Y]ou saw me read this last week but a lot

of folks didn’t and it’s a very important message—

especially those of you who smoke Chesterfields—

you probably been wonderin’ about this. You hear

stuff all the time about ‘‘cigarettes are harmful

to you’’ this and that and the other thing... .

Here’s an ad, you’ve seen it in the papers—

please read it when you get it. If you smoke it will

make you feel better, really.

‘*Nose, throat and accessory organs not

adversely affected by smoking Chesterfield. This

is the first such report ever published about any

cigarette. A responsible consulting organization has

reported the results of a continuing study by a

competent medical specialist and his staff on the

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Appendix A

Now—here’s the important thing. ‘‘The

medical specialist, after a thorough examination

of every member of the group, stated: ‘It is my

opinion that the ears, nose, throat and accessory

organs of all participating subjects examined by

me were not adversely affected in the six-months

period by smoking the Chesterfield cigarettes

provided.’ ”’

Now that ought to make you feel better if

you’ ve had any worries at all about it. I never did.

I smoke two or three packs of these things every

day. I feel pretty good. I don’t know, I never did

believe they did you any harm and now, we’ve got

the proof. So—Chesterfields are the cigarette for

you to smoke, be they regular size or king-size.

effects of smoking Chesterfield cigarettes. 5 J.A. 156 (Sept. 24, 1952).?

‘*A group of people from various walks of

life was organized to smoke only Chesterfields. For

2. Many similar Arthur Godfrey advertisements were also introduced into

evidence, including the following three:

six months this group of men and women smoked

their normal amount of Chesterfields—10 to 40

a day. 45% of the group have smoked Chesterfields

continually from one to thirty years for an average

of 10 years each.

‘**At the beginning and at the end of the six

- months period each smoker was given a thorough

examination, including X-ray pictures, by the

medical specialist and his assistants. The

examination covered the sinuses as well as the nose,

ears and throat.’’

You know you hear all this applesauce about—you'd

better quit smoking, pal, or you won’t be here long and stuff.

Listen to this. [At this point Mr. Godfrey told his listeners

about the same ‘‘medical’’ study that he had related on

September 24.]

There’s the story. Were not adversely affected.

Chesterfield is the right—[{now addressing Tony Marvin, the

announcer] Will you hold that over there for me?—

Chesterfield—you'’ve been smoking ‘em, gosh, Tony, how

many do you smoke a day?

(Cont'd)

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Appendix A

In 1955, Mrs. Cipollone stopped smoking Chesterfield

(Cont'd)

{Mr. Marvin]: | run about 2% packs a day, Arthur.

(Mr. Godfrey]: 2 packs a day. If he wasn’t so tight,

he’d smoke 3. LAUGHTER. They’re wonderful cigarettes,

in either size, you know, king-size, this size here, or the regular

size, they’re the same tobacco. Go ahead and smok’em and

enjoy’em, they’re wonderful.

5 J.A. 158 (Oct. 1, 1952).

{I have] a client here, the Chesterfield people, Liggett

and Myers are their names. [T]he firm . . . is an honorable

one, a trustworthy one. For years and years and years that

they have been advertising, you never heard them make an

unsubstantiated claim—ever! Certainly, not during the time

that I’ve been with "em. They came out, not so long ago,

with a report by an eminent physician—it’s a good report—|

suppose there are those who wonder about it.

If you believe in me, and over the 23 years I’ve been

in the radio, you know that I have never yet misled you with

advertising. Nobody has been able to buy me enough to do

that. If you believe in me, then you take my work that I know

this—that the Liggett and Myers people don’t make statements

that they can’t substantiate. And when they say that after

this test that they made with the doctor, that after he made

it, he comes up and say, quote—‘It is my opinion that the

ears, nose, throat, and accessory organs of all participating

subjects examined by me, were not adversely affected in the

six-months period by smoking the cigarettes provided.’

And they mean what they say—that specialist said it.

Liggett and Myers have substantiated it. Remember that when

(Cont'd)

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Appendix A

cigarettes and began to smoke L & M filter cigarettes, also made

by Liggett. In response to a question as to why she switched to

the L & M brand, Mrs. Cipollone stated that ‘‘[{w]ell, they were

talking about the filter tip, that it was milder and a miracle it

would keep the stuff inside a trap, whatever.’” When asked why

(Cont'd)

you’re wondering about cigarettes. Smoke Chesterfields—

they’re good.

5 J.A. 161 (Nov. 5, 1952).

[A] medical specialist is making . . . examinations .. .

every two months. Now they’re gone, | think, as far as 8

months. That’s so far, 8 months. What they did was get a

group of people from various walks of life... . And 45%

of this group smoked Chesterfields for an average of over

10 years. After 8 months, the medical specialist reports he

has observed no adverse effects whatever on the noses, the

throat, the sinuses, the ears, or other organs from smoking

Chesterfields.

That’s—that *ems to me to [mean] mildness, real

mildness. You’ve .<en wondering about whether or not

smoking does things to you which you don’t want to do?

Weil, why don’t you smoke Chesterfields. Here’s a guy

watchin’ a lot of people and nothin’ happened to them yet.

We've been smokin ‘em a long time. Of course, we were

always this way.

You can’t judge by us. But they’re good, very fine, and

I never recall seein’ on anybody’s gravestone—He Smoked

Too Much, did you? I never did. So Chesterfield’s for you,

regular or king size.

5 J.A. 171 (Jan. 8, 1953).

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Appendix A

she desired the filter tip, she testified that ‘‘it was the new thing

and I figured, well, go along [,and that] it was better [because

t]he bad stuff would stay in the filter then.’” When asked whether

concern about the ‘‘bad stuff’’ was due to a concern about her

health, she stated ‘‘[nJot really. . . . It was the trend. Everybody

was smoking the filter cigarettes and I changed, too.’’

She also stated that although she could not remember any

specific advertisements, she did ‘‘recall the ads and. . . remember

the tips [and] the messages of a filter, a safer, something to that

effect. . . . That it would filter the nicotine and the tar and the

tobacco[, and t]hat it would be a cleaner and fresher smoke.’’

Mrs. Cipollone also stated that she ‘‘recall[ed] seeing an ad that

said doctors recommend you smoke ... I think it was L &

M’s. .. . [T]hrough advertising, I was led to assume that they

were safe and they wouldn’t harm me... There was lots of

advertising. There was advertising everywhere. There was

advertising in magazines, on billboards, in newspapers.’’

Mr. Cipollone also introduced evidence as to how the L &

M brand was marketed during the years that Mrs. Cipollone

smoked that brand. One series of advertisements that appeared

on television and in magazines at the outset of L & M’s

introduction to the public stated that L & M ‘‘miracle tip’’ filters

were ‘‘just what the doctor ordered!’’; the ‘‘just what the doctor

ordered’’ phrase often appeared in a large bold typescript in

magazine advertisements as ‘‘remov[ing] the heavy particles,

leaving you a Light and Mild smoke.”’

In 1968, Mrs. Cipollone stopped smoking the L & M brand

and started smoking the Virginia Slims brand, manufactured by

Philip Morris. She stated that she switched ‘‘because it was very

glamorous and very attractive ads and it was a nice looking

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Appendix A

cigarette. That persuaded me.’’ In the 1970’s, Mrs. Cipollone

switched to the Parliament brand, also manufactured by Philip

Morris. She testified that this brand was advertised as having a

**recessed’”’ filter and that she thought that this made it healthier.

In 1974, she changed from the Parliament to the True brand,

a cigarette manufactured by Lorillard, Inc. (‘‘Lorillard’’) and

advertised as low tar, upon the advice of her doctor, who had

told her son to stop smoking.

From 1942 until the early 1980’s, Mrs. Cipollone smoked

between one pack and two packs of cigarettes per day. The only

exception to this pattern was that, at the urging of her husband,

Mrs. Cipollone substantially reduced her smoking during her first

pregnancy in the 1940’s. In 1981, Mrs. Cipollone was diagnosed

as having lung cancer, but even though her doctors advised her

to stop smoking, she was unable to do so. Mrs. Cipollone

continued to smoke until June of 1982 when her lung was removed.

Even after that, she smoked occasionally, in secret. She testified

that she was ‘‘addicted’’ to cigarette smoking and that it was

terribly difficult for her to give it up. She stopped smoking in

1983 after her cancer had spread widely and she had become

terminally ill. Mrs. Cipollone died on October 21, 1984.

Evidence was also introduced on the subject of Mrs.

Cipollone’s awareness of the health consequences of smoking

cigarettes. Some of that evidence has already been alluded to:

she switched to the L & M brand in part because she thought

that brand safer than the Chesterfield brand, and she later switched

to the Parliament and True brands out of concern for her health.

In addition, from the beginning of the Cipollones’ marriage in

1947, Mr. Cipollone repeatedly told his wife that she should stop

smoking because it was unladylike and bad for her health. When

reports linking smoking with cancer and heart disease began to

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Appendix A

appear in ‘he media, Mr. Cipollone repeatedly brought them to

his wife’s attention. Other members of the Cipollone family also

told her that cigarette smoking was dangerous to her health and

could cause cancer. After January 1, 1966, every package of

cigarettes purchased by Mrs. Cipollone bore the Congressionally

mandated warning labels. ;

There is also evidence that Mrs. Cipollone feared that her

cigarette smoking would damage her health. When she developed

a bad cough, her concern about the possible effect of smoking

on her health led her, apparently prior to 1966, to make novenas

to Saint Jude asking his intercession on her behalf to prevent her

from developing cancer. There is also evidence, however, that

Mrs. Cipollone disbelieved the reports linking cigarette smoking

to cancer and other health problems. As explained above, there

is evidence that she read the cigarette companies’ advertisements,

understood them as representing that the cigarettes were safe, and

thus, as she put it “‘was led to assume that [the cigarettes that

I purchased] wouldn’t harm me.”’ She stated that she had often

read cigarette company or Tobacco Institute statements, reported

in articles about the health consequences of smoking or reproduced

in advertisements, stating that the link between smoking and

disease has not been proven. She also testified that because she

found it so difficult to stop smoking, she “‘[mjaybe . . . didn’t

want to believe’’ the reports that she heard that smoking caused

cancer or other diseases and that she ‘“‘didn’t believe’’ that her

smoking would cause her to contract lung cancer. In addition,

Mrs. Cipollone stated that she believed that ‘‘[t]obacco companies

wouldn’t do anything that was really going to kill you.”’

IIl. PROCEDURAL HISTORY

On August 1, 1983, Mr. and Mrs. Cipollone filed a complaint

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Appendix A

in the district court for the District of New Jersey, founded on

diversity of citizenship, seeking damages against Liggett, Philip

Morris and Lorillard for the suffering and monetary loses resulting

from Mrs. Cipollone’s lung cancer. The complaint alleged that

the lung cancer resulted from Mrs. Cipollone’s smoking of

Cigarettes manufactured by the named defendants.

On May 31, 1985, following Mrs. Cipollone’s death, and suing

in his capacity as Mrs. Cipollone’s executor and on his own behalf,

Mr. Cipollone filed a third amended complaint, upon which the

case was tried. The third amended complaint included damages

claims against each defendant based on the following theories

of liability:’

1. Strict liability in tort (and negligence) on the theory that

the defendants’ failed to warn adequately (or negligently failed

to warn adequately) of the health effects of smoking (‘‘the failure

to warn claim’’);

2. Strict liability in tort on the theory that the defendants

marketed defectively designed cigarettes rather than alternatively

designed, safer cigarettes (‘‘the design defect claim’’);

3. Strict liability in tort on the theory that the health risks

of the defendants’ cigarettes exceeded their social utility (“‘the

generic risk-utility claim’’);

4. Breach of express warranty regarding the health effects

of smoking (‘‘the express warranty claim’’);

3. The third amended complaint contained 14 counts; we have therefore

summarized the salient points.

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Appendix A

5. Fraud and misrepresentation in the advertising and

promotion of cigarettes from 1940 to 1983 (‘‘the fraudulent

misrepresentation claim’’);

6. Conspiracy to defraud the public regarding the health

effects of smoking (‘‘the conspiracy to defraud claim’’);

The defendants moved for summary judgment on the ground

that the plaintiff’s claims were preempted by the Federal Cigarette

Labeling and Advertising Act, Pub.L. No. 89-92, 79 Stat. 282

(1965) (codified as amended at 15 U.S.C. §§ 1331-1340 (1982 &

Supp. II 1984)), a statute enacted in 1965 in the wake of the

Surgeon General’s historic report on the hazards of cigarette

smoking. The Act required health warnings, as set forth in the

statute and subsequently strengthened by statutory amendments,

to be placed on cigarette packages. The effective date of the statute

was January |, 1966. See Pub.L. No. 89-92, § 11, 79 Stat. at 284.

The district court held that the statute did not have preemptive

effect, but certified the preemption question for interlocutory

review by this court pursuant to 28 U.S.C. § 1292(b) (1982). We

assumed jurisdiction over the appeal and concluded that the Act

impliedly preempted some of the plaintiff’s claims, holding as

follows:

[T]he Act preempts those state law damage actions

relating to smoking and health that challenge either

the adequacy of the warning on cigarette packages

or the propriety of a party’s actions with respect

to the advertising and promotion of cigarettes. . . .

[Where the success of a state law damage claim

necessarily depends on the assertion that a party

bore the duty to provide a warning to consumers

19a

Appendix A

in addition to the warning Congress has required

on cigarette packages, such claims are preempted

as conflicting with the Act.

789 F.2d at 187 (footnote omitted). We remanded the case to

the district court so that it might determine which claims were

preempted.

The district court interpreted our decision as preempting the

plaintiff’s failure to warn, express warranty, fraudulent

misrepresentation, and conspiracy to defraud claims to the extent

that they sought to challenge the defendants’ advertising,

promotional and public relations activities after January |, 1966.

See 649 F.Supp. 664, 669, 673-75 (D.N.J.1986). Because Mrs.

Cipollone did not smoke cigarettes manufactured by Philip Morris

or Lorillard before January 1, 1966, the district court granted

judgment on the pleadings on the failure to warn and express

warranty claims as to those defendants. However, the district court

held that the plaintiff’s design defect and risk-utility claims were

not preempted. See id. at 669-72.

In another pretrial ruling, the district court struck the

plaintiff’s generic risk-utility claim on the ground that it was barred

through the retroactive application of the New Jersey Products

Liability Act, 1987 N.J.Sess.Law Serv. ch. 197, 188-93 (West)

(codified at N.J.S.A. §§ 2A:58C-1 to -7 (West 1987)). See

Dist.Ct.Op. 1-6 (Oct. 27, 1987).

After five years of discovery and numerous pretrial motions,

the case proceeded to trial! on plaintiff’s failure to warn, design

defect, express warranty, fraudulent misrepresentation, and

conspiracy claims, and on defendants’ comparative fault and

‘ statute of limitations defenses. On April 21, !988, at the close

20a

Appendix A

of plaintiff’s proofs, the district court struck the design defect

claim on the ground that plaintiff had failed to present sufficient

evidence that defendants’ failure to market an alternatively

designed cigarette when it became feasible to do so in the mid-1970s

was a proximate cause of Mrs. Cipollone’s illness and death. See

683 F.Supp. 1487, 1493-95 (D.N.J.1988). This ruling has not been

challenged on appeal.

As a result of the district court’s rulings, jury deliberations

were limited to the fraudulent misrepresentation claim against each

defendant, the conspiracy to defraud claim against each defendant,

the failure to warn claim agai.ist Liggett, and the express warranty

claim against Liggett. The district court also took the defendants’

statute of limitations defense from the jury by granting partial

summary judgment for the plaintiff on this issue. See Dist.Ct.Op.

(Dec. 21, 1987).

After a four-month trial, the jury deliberated for four and

one half days and returned its verdict in the form of answers to

special interrogatories. See Fed.R.Civ.P. 49a). The interrogatories

and the jury’s answers are as follows:

1. Has plaintiff proven all of the elements necessary to

establish fraudulent misrepresentation or concealment by

defendant Liggett, prior to 1966, of material facts concerning

significant health risks associated with cigarette smoking?

Yes

No X

2. Has plaintiff proven all of the elements necessary to

establish fraudulent misrepresentation by defendant Philip Morris,

prior to 1966, of material facts concerning significant health risks

2la

Appendix A

associated with cigarette smoking?

Yes

No X

3. Has plaintiff proven all of the elements necessary to

establish fraudulent misrepresentation by defendant Lorillard,

prior to 1966, of material facts concerning significant health risks

associated with cigarette smoking?

Yes

No X

4. Was there a conspiracy prior io 1966 to fraudulently

misrepresent and/or conceal material facts concerning significant

health risks associated with cigarette smoking?

Yes

No X

5. If you answered ‘‘yes’’ to question #4, were any of the

defendants members of that conspiracy?

Liggett Group, Inc. Yes No

Philip Morris Incorporated Yes No

Lorillard, Inc. Yes No

6. If you answered ‘‘yes’’ to question number 5, has plaintiff

proven all of the elements necessary to establish fraudulent

misrepresentation or concealment, prior to 1966, by any member

' of the conspiracy?

Appendix A

Yes

No

7. Should Liggett, prior to 1966, have warned consumers

regarding health risks of smoking?

Yes X

No

8. If you answered ‘‘yes’’ to question 7, was that failure to

warn prior to 1966 a proximate cause of all or some of Mrs.

Cipollone’s smoking?

Yes X

No

9. If you answered ‘‘yes’’ to question 8, was such smoking

a proximate cause of Mrs. Cipollone’s lung cancer and death?

Yes X

No

10. If you answered ‘‘yes’’ to question 9, did Mrs. Cipollone

voluntarily and unreasonably encounter a known danger by

smoking cigarettes?

Yes X

No

11. If you answered ‘‘yes’’ to quesiion 10, was this conduct

by Mrs. Cipollone a proximate cause of her lung cancer and death?

Yes X

No

23a

Appendix A

12. If you answered ‘‘yes’’ to question 11, what is the

percentage of responsibility for Mrs. Cipollone’s injuries

attributable to each of the following parties:

Mrs. Cipollone 80%

Liggett Group, Inc. 20%

(NOTE: The sum of these precentages must equal 100%].

13. Did Liggett make express warranties to consumers

regarding the health aspects of its cigarettes?

Yes X

No

14. If you answered ‘‘yes’’ to question 13, did any Liggett

products used by Mrs. Cipollone breach that warranty?

Yes X

No

15. If you answered ‘yes’? to question 14, was Mrs.

Cipollone’s use of these products a proximate cause of her lung

cancer and death?

Yes X

No

16. If you answered ‘‘yes’’ to any of the following questions:

1, 2, 3, 6, 9 or 15, what damages did Mrs. Cipollone sustain?

$ none

24a

Appendix A

17. If you answered ‘‘yes’’ to any of the following questions:

1, 2, 3, 6, 9, or 15, what damages did Mr. Cipollone sustain?

$400 ,000

18. If you answered ‘‘yes’’ to any of the following questions:

1, 2, 3, 6, or 9, is plaintiff entitled to punitive damages against

one or more of the defendants?

Yes

No X

19. If you answered ‘‘yes’’ to question 18, to what amount

is plaintiff entitled?

$

20. If you awarded a sum under question 19, what amount

of this total is attributable to each of the following parties?

Liggett Group, Inc. _ S$

Philip Mo Incorporated 5S

Lorillard, Inc. $

[NOTE: these amounts should add up to the total awarded

under question 19.]

As the answers to the interrogatories indicate, the jury rejected

the fraudulent misrepresentation claims and the conspiracy to

defraud claims against all defendants. As to the failure to warn

claim against Liggett, the jury concluded that Liggett breached

its duty to warn of the health hazards of smoking before 1966,

that this breach was a proximate cause of Mrs. Cipollone’s

25a

Appendix A

smoking, and that Mrs. Cipollone’s smoking was a proximate

cause of her death. No damages were awarded on the failure to

warn claim, however, because New Jersey’s comparative fault law

bars a plaintiff from recovering damages if she is more than 50%

at fault for the injury, and the jury found that Mrs. Cipollone

“‘voluntarily and unreasonably encounter[ed] a known danger by

smoking cigarettes’’ and in so doing bore 80% of the responsibility

for her injuries. As to the express warranty claim, the jury found

that Liggett had breached an express warranty made to consumers.

The jury awarded Mr. Cipollone $400,000 to compensate him

for damages that he sustained from Liggett’s breach of warranty;

the jury awarded Mrs. Cipollone’s estate no damages on the breach

of warranty claim.

On June 29, 1988, the plaintiff moved for a new trial on

the limited issue of Mrs. Cipollone’s damages and to amend the

judgment to include prejudgment interest pursuant to New Jersey

Rule 4:42-11(b). On July 1, 1988, Liggett moved for judgment

n.o.v. and, in the alternative, for a new trial on account of alleged

error in the district court’s jury instructions on express warranty

and its special interrogatories. On August 24, 1988, the district

court denied all of the post-trial motions. See 693 F.Supp. 208

(D.N.J.1988). The defendants and Mr. Cipollone filed timely

notices of appeal.

In its appeal, Liggett contends that the district court made

the following prejudicial errors in its jury instructions: (1) it failed

to instruct the jury that Mrs. Cipollone’s nonreliance on the Liggett

advertisements would preclude her recovery on the express

warranty claim; (2) it failed to the instruct the jury that a buyer’s

actual knowledge of a warranty-breaching condition bars recovery

on an express warranty claim under the doctrine of assumption

' of risk or contributory fault; and (3) it erroneously instructed

26a

Appendix A

the jury in several respects on the failure to warn claim, most

significantly by failing to impose a but-for causation requirement.

Liggett also contends that the district court erred in failing

to grant its motion for judgment n.o.v. on the express warranty

claim on the grounds that (1) the jury’s finding that Mrs. Cipollone

‘*voluntarily and unreasonably encounter[ed] a known danger by

smoking cigarettes’’ established lack of proximate causation as

a matter of law; (2) the plaintiff offered no evidence that Mrs.

Cipollone’s lung cancer was proximately caused by any claimed

breach of express warranty; and (3) the evidence cannot support

a finding that any Liggett advertisement made a warranty covering

health effects in the future from forty years of smoking. Liggett

also contends that the district court erred by granting plaintiff

partial summary judgment on defendant’s affirmative defenses

based on the statute of limitations.

In his appeal, Mr. Cipollone contends that (1) the district

court’s jury charge and interrogatories on the failure to warn issue

erroneously and unfairly allowed the jury to consider Mrs.

Cipollone’s post-1965 smoking in determining her percentage of

comparative fault; (2) the district court erred in applying the New

Jersey Products Liability Act to strike the risk-utility claim; (3)

the district court’s refusal to award prejudgment interest

contravenes New Jersey Court Rule 4:42-11(b); and (4) the district

court erred in applying our preemption decision to the intentional

tort claims (i.e. the fraudulent misrepresentation and conspiracy

to defraud claims). Mr. Cipollone also announced that if the

verdict in his favor on the breach of express warranty claim and

his contention that he is entitled to prejudgment interest were

upheld, he would not press his other contentions.

In its protective cross-appeal, Philip Morris contends that

27a

Appendix A

Mr. Cipollone’s intentional tort claims are preempted, and that,

in any event, these claims are mooted by the jury’s findings. In

its protective cross-appeal, Lorillard asserts that, in view of Mr.

Cipollone’s concession that he would be satisfied to accept the

breach of express warranty verdict plus prejudgment interest, our

assumption of jurisdiction over Mr. Cipollone’s appeal relative

to the claims against it and Philip Morris would violate the ‘‘case

or controversy’’ requirement of Article III of the United States

Constitution.‘ Lorillard also contends that the intentional tort

claims are preempted by the Labeling Act.

4. We find this contention to be without even colorable merit and dispose

of it summarily. Unlike the plaintiffs in Granfied v. Catholic University of

America, 530 F.2d 1035 (D.C.Cir.), cert. denied, 429 U.S. 821, 97 S.Ct. 68,

50 L.Ed.2d 81 (1976), we think that there is no question regarding Mr. Cipollone’s

‘““wholehearted contrariety,’’ 530 F.2d at 1045, to the defendants’ position.

Neither do we find applicable the mootness concerns motivating the decision

in In re Coordinated Pretrial Proceedings in Petroleum Products, Antitrust

Litigation, 830 F.2d 198 (Emerg.Ct.App.), cert. denied, 484 U.S.969, 108 S.Ct.

466, 98 L.Ed.2d 405 (1987). In Petroleum Products, a pending decision before

the Ninth Circuit—over which the Emergency Court of Appeals had no

control—might have mooted, as a matter of law, the proceedings before, or

decision of, that court. See id. at 202-04. Here, by contrast, we address the

intentional tort claims simultaneously with our rejection of Mr. Cipollone’s

position on the express warranty claim. Thus, we have no reason to believe

that Mr. Cipollone’s position lacks, or will lack, ‘‘wholehearted contrariety”’

to Lorillard’s on the intentional tort claims. Moreover, the fact that plaintiff

is willing to settle for less than he might get does not mean that his position

is not contrary to the defendants. For all of these reasons, we have no problem

* finding a case or controversy under Article III.

28a

Appendix A

1V. SHOULD MRS. CIPOLLONE’S POST-1965 CONDUCT

HAVE BEEN CONSIDERED IN DECIDING HER

COMPARATIVE FAULT ON THE FAILURE TO WARN

CLAIM?’ \

The New Jersey Comparative Fault Act, N.J.S.A. 2A:15-5.1,

States that:

Contributory negligence shall not bar recovery in

an action by any person .. . to recover damages

for negligence resulting in death or injury to person

or property, if such negligence was not greater than

the negligence of the person against whom recovery

is sought .. . . Any damages sustained shall be

diminished by the percentage sustained of

negligence attributable to the person recovering.

The Comparative Fault Act can apply to strict liability actions

if the plaintiff’s conduct can be found to constitute contributory

negligence. See Suter v. San Angelo Foundry & Machine Co.,

81 N.J. 150, 164, 406 A.2d 140, 147 (1979). Thus, if Mrs. Cipollone

were more that 50% responsible for her own smoking, as the jury

found her to be, plaintiff would be barred from recovering under

his failure to warn claim. As we have noted, the interplay between

New Jersey’s comparative fault scheme and the preemptive effect

of the Labeling Act produced an anomalous situation at trial.

The district court did not distinguish between Mrs. Cipollone’s

pre-1966 and post-1965 conduct when instructing the jury to

consider the degree to which she was at fault pursuant to New

5. Although Mr. Cipollone was prepared to forego pursuit of this claim

in the event that his breach of express warranty verdict was upheld, that has

not happened. See infra Part VI.

29a

Appendix A

Jersey comparative fault law.*

The wording of special verdict interrogatories 10, 11, and

12 was to the same effect,’ permitting the jury to consider Mrs.

6. The district court instructed the jury as follows:

Defendant, Liggett, has the burden to prove by a

preponderance of the believable evidence that Rose Cipollone

had a complete understanding and apprec.ation of the nature

and extent of the health risks of cigarette smoking, and further

that her use of cigarettes was voluntary and unreasonable. _. .

in determining whether Rose Cipollone should be held

responsible for her injuries, you must consider the cigarettes

which Rose Cipollone smoked and the health risks which they

have alleged to have. If you have determined that the use

of those cigarettes involved any significant health risk, you

must then decide whether Rose Cipollone had knowledge and

appreciation of those risks and, having such knowledge and

appreciation, voluntarily and unreasonably proceeded to

encounter those risks by smoking cigarettes and by failing

to quit smoking. . .

If you decide that by continuing to smoke Rose Cipollone

voluntarily and unreasonably encountered a known risk, you

must then decide whether that conduct was a proximate cause

of Rose Cipollone’s injuries. However, if you find that she

did not do so voluntarily or acted reasonably then defendants

have not met their burden as to this defense.

2 J.A. 108-10.

7. Imterrogatory 10 asked whether ‘“‘Mrs. Cipollone voluntarily and

unreasonably encounter(ed] a known danger by smoking cigarettes.’’

Interrogatory |! aked whether ‘‘this conduct by Mrs. Cipollone [was] a proximate

cause of her lung cancer and death."’ Interrogatory 12 asked the jury to apportion

* responsibility between Mrs. Cipollone and Liggett based upon its answers to

the preceding questions 10 and |1. See supra at 554.

30a

Appendix A

Cipollone’s fault to the extent it believed that she acted

unreasonably in continuing to smoke after 1965. However, the

court instructed the jury not to consider Liggett’s post-1965

conduct. Mr. Cipollone contends that the jury instructions were

inconsistent with Ostrowski v. Azzara, 111 N.J. 429, 545 A.2d

148 (1988), in which the New Jersey Supreme Court held that

once a legal wrong has occurred, plaintiff’s conduct after that

time bears only on mitigation of damages (even if some of

plaintiff’s injuries have not yet manifested themselves). Such

conduct does not, however, bear on whether plaintiff’s

comparative fault falls above or below the 50% threshold.

Mr. Cipollone also contends that the district court’s jury

instructions were asymmetrical and unfair because they permitted

the jury to use Mrs. Cipollone’s post-1965 conduct to bar her

claim even though the post-1965 marketing practices of the

defendant were free from scrutiny. He points out that the jury

was required to bar Mrs. Cipollone’s failure to warn claim in

its entirety if it believed that she was 80% responsible for her

injury in light o’ her smoking from 1942 to 1983 even if it believed

that Liggett’s failure to warn was, for example, 67% responsible

for Mrs. Cipollone’s smoking from 1942 to 1966.

Because the facts and reasoning of Ostrowski are so important

to our resolution of the issue of Mrs. Cipollone’s post-1965

conduct, we recount them in some detail. Mrs. Ostrowski was

a patient whose diabetes, poor diet, and cigarette smoking caused

her to have severe blood circulation problems. She went to her

podiatrist to complain of soreness in her left toe. After several

visits, and after considering her representation (which proved to

be false) that she had seen her internist regarding her diet and

insulin dosage, the podiatrist recommended that the toe nail on

the sore toe be removed to allow drainage. After the surgery,

3la

Appendix A

the plaintiff continued to smoke, despite advice that she should

stop (because smoking greatly increases the blood circulation

problems caused by diabetes). Several weeks after the surgery,

it became clear that the blood flow to the toe was insufficient

to heal the toe; the plaintiff was left with a non-healing, pre-

gangrenous wound. Mrs. Ostrowski had to undergo three different

by-pass surgeries to increase blood circulation to the toe. The

last operation involved a vein transplant from one leg to another.

Mrs. Ostrowski sued the podiatrist, contending that the

podiatrist was negligent in her initial decision to remove the toe

nail, that the toe nail should not have been removed, and that

her subsequent problems with her leg were proximately caused

by the podiatrist’s negligence. The podiatrist contended that the

plaintiff was at fault in both her pre-surgery and post-surgery

conduct and that this conduct contributed to her injuries. The

jury found that the podiatrist had acted negligently in removing

the plaintiff’s toenail but found that plaintiff’s fault, based on

both her pre- and post-surgery conduct, exceeded that of the

podiatrist (51% to 49%). The plaintiff’s recovery was therefore

barred by the trial court under New Jersey comparative fault law

because her fault exceeded 50%.

The Appellate Division of the Superior Court affirmed, but

the Supreme Court of New Jersey reversed. Because the podiatrist’s

negligence was in performing the toe surgery, the Court

conceptualized the plaintiff's behavior after treatment had begun

but before the toe surgery as relevant to comparative fault.

However, the Court concluded that her post-surgery behavior was

relevant only to avoidable consequences.* On remand, the jury

8. Avoidable consequences is the name given to the damage that plaintiff

causes to herself by breaching her duty to mitigate damages.

32a

Appendix A

was instructed to arrive at two percentage figures regarding

plaintiff's conduct: first, the degree to which her conduct after

treatment had begun was responsible for the toe surgery, and

second, the degree to which her conduct after treatment had

begun—considering her conduct both before and after the toe

surgery—was responsible for her ultimate injury, the bypass

surgery. If the first percentage (the plaintiff’s fault for the toe

surgery) was less than the physician’s fault for the toe surgery,

the plaintiff would recover. Her recovery, however, would be offset

by the second percentage times the damages suffered (which reflects

plaintiff’s total responsibility for her ultimate injury).° If the first

percentage was greater than the physician’s fault for the surgery,

plaintiff's recovery would be barred by the Comparative Fault Act.

The Court distinguished between the plaintiff’s conduct before

and after the toe surgery on the ground that ‘‘[a]voidable

consequences . . . come[ ] into action when the injured party’s

carelessness occurs after the defendant’s legal wrong has been

committed”’ but “‘[cjontributory negligence . . . comes into action

when the injured party’s carelessness occurs before defendant’s

wrong has been committed or concurrently with it.’’ 111 N.J. at

9. An example may help to clarify. Suppose the jury finds that the plaintiff

suffered $100,000 in damages from the bypass surgery. Suppose also the jury

finds that, after plaintiff had begun treatment with the podiatrist, her conduct

before the toe surgery was 10% responsible for her ultimate injury (the first

percentage), but that her conduct before and after the toe surgery combined

were 80% responsible (the second percentage). Thus the podiatrist’s conduct

(before the toe surgery) must have been 20% responsible for the ultimate injury.

On these facts, even though the plaintiff's total conduct was more responsibie

for her injury than the podiatrist’s (80% versus 20%), she would recover, because

her conduct before the toe surgery was less responsible for her ultimate injury

than the podiatrist’s conduct during that time (10% versus 20%). However,

her ultimate recovery would be only $20,000 (because the podiatrist was only

20% responsible for the ultimate injury).

33a

Appendix A

438, 545 A.2d at 152.'° In explaining why it thought that the jury

should arrive at two percentages to measure plaintiff’s fault, the

Court reasoned that ‘‘it would be the bitterest irony if the rule

of comparative negligence, designed to ameliorate the harshness

of contributory negligence, should serve to shut out any recovery

to one who would otherwise have recovered under the law of

contributory negligence [because her contributory conduct was

relevant to avoidable consequences rather than contributory

negligence].’’ Jd. at 441-42, 545 A.2d at 154.

The court held that the plaintiff’s conduct before treatment

had begun was irrelevant to both the comparative fault and

avoidable consequence injuries, under the doctrine that the

“* ‘defendant “‘must take the plaintiff as he finds him.’’ ’ ’’ Jd.

at 438, 545 A.2d at 152 (citation omitted). Nevertheless, the Court

made clear that the plaintiff’s conduct before treatment had begun

was not totally irrelevant to the case: that conduct was relevant

to determining what damages were a proximate result of the

defendant’s negligence, because, as we have noted, some of the

damage to the plaintiff’s leg could have been caused not by the

defendant’s negligence but by the plaintiff’s pre-treatment

condition. See id. at 448, 545 A.2d at 157.''

10. The Court noted, however, that this timeline approach to dividing the

plaintiff's conduct into that relevant to contributory fault and that relevant

to avoidable consequences will not work in every case. See 111 N.J. at 438

n. 2, 545 A.2d at 152 n. 2 (citing Waterson v. General Motors Corp., 111 N.J.

238, 544 A.2d 357 (1988), which found that failure to use a seat belt, although

not a cause of the automobile accident that resulted in injury, was a cause of

avoidable consequences).

11. The Court also noted that ‘‘it is often difficult to determine how much

of the plainuff’s injury is due to the preexisting condition and how much the

(Cont'd)

34a

Appendix A

We agree with Mr. Cipollone’s contention that it is

appropriate to conceptualize our preemption decision as imposing

an automatic cut-off date for imposition of liability. We further

agree with Mr. Cipollone that, in light of the preemption decision,

the doctrines set out in Ostrowski should have been applied in

this case. As Liggett emphasizes throughout its brief, its post-1965

marketing oractices could not form the basis for any tort or

warranty claim as a matter of law; hence, Liggett’s arguably

tortious conduct was completed as of January 1, 1966. Therefore,

Mrs. Cipollone’s post-1965 conduct should have been considered

as relevant to avoidable consequences, possibly reducing her

damages but not foreclosing liability.

We reject Liggett’s contention that ‘application of plaintiff’s

interpretation of Ostrowski would require this court to hold that

the case overruled the New Jersey Supreme Court’s [product

liability] decisions in Suter v. San Angelo Foundry & Machine

Co., 81 N.J. 150, 406 A.2d 140 (1979); Maiorino v. Weco Products

Co., 45 N.J. 570, 214 A.2d 18 (1965) and Cintrone v. Hertz Truck

Leasing, 45 N.J. 434, 212 A.2d 769 (1965).”’ Liggett’s Br. at 43

n. 50. Liggett’s argument apparently is that the instant case is

no different from the typical toxic tort case in which there may

be a significant interval between the time of defendant’s wrongful

act (the sale of or exposure to the defective product) and the time

plaintiff’s injury from use of the product manifests itself.

Therefore, according to Liggett, all of the plaintiff’s pre-injury

conduct should bear on comparative fault. Our preemption

decision renders this analogy inapposite, however. In the more

(Cont'd)

aggravation is caused by the defendant’’ and that the defendant should bear

the burden of separating the two so that any damage not separable is borne

by the defendant. 111 N.J. at 439, 545 A.2d at 152.

35a

Appendix A

typical case, the jury considers all of the defendant’s pre-injury

conduct also. Because that cannot happen here, we find it unfair

and impermissible for the jury to consider Mrs. Cipollone’s

comparative fault during the period (1966-1981) for which Liggett’s

conduct is unjudgable.

We have no way of knowing how much of the 80% fault

that the jury ascribed to Mrs. Cipollone is attributable to her

pre-1966 smoking and how much to her post-1965 smoking. The

judgment entered on the jury verdict in Liggett’s favor on the

failure to warn claim must therefore be reversed (the error is

obviously not harmless) and the case remanded for new trial on

that issue.

We do not dispute Liggett’s contention that we could analyze

the case differently. However, we believe that the artificial cut-

off so skews the normal balance that only the Ostrowski avoidable

consequences analysis can mitigate the unfairness and disruption

to state tort law wrought by our preemption decision. We

acknowledge that the retrial must proceed, to some extent, with

an artificial distinction between conduct before and after January

1, 1966, and that the expert witnesses will face a difficult task

on allocating the consequence of pre-1966 and post-1965 conduct.

However, that result is forced upon us by the circumstances. This

will not be the first time, nor the last, that a legal construct will

have constrained a trial. We are confident that the extremel: able

lawyers and the distinguished trial judge in whose hands this case

rests will do justice.

On retrial, the jury should be asked whether Liggett’s pre-1966

36a

Appendix A

failure to warn caused Mrs. Cipollone to smoke cigarettes.'? The

jury must consider the relative degrees to which Mrs. Cipollone

and Liggett were at fault for Mrs. Cipollone’s pre-1966 smoking.

If Mrs. Cipollone is thought to have been more than 50% at fault

than Liggett for her pre-1966 smoking, then the failure to warn

claim ends there, and Mrs. Cipollone’s recovery is barred on that

claim. If, however, the jury finds that Mrs. Cipollone’s pre-1966

fault for her smoking is 50% or less (and that that smoking was

a proximate cause of her cancer), the jury must then consider

the issue of avoidable consequences, considering Mrs. Cipollone’s

conduct both before and after January 1, 1966. The jury may

not evaluate the propriety of the defendant’s cigarette marketing

practices after 1965,because the defendants have been absolved

from liability for otherwise tortious and unfair marketing practices

by the Labeling Act.

Vv. DID THE DISTRICT COURT OTHERWISE ERR IN

INSTRUCTING THE JURY ON THE FAILURE TO

WARN CLAIM?

Liggett contests several facets of the district court’s jury charge

on the failure to warn claim. Had the verdict on the failure to

warn claim not been set aside on the grounds set forth in Part

IV, we would have had to address these arguments in connection

with Liggett’s contention that the jury’s answers to interrogatories

7, 8 and 9, in which it found that Liggett’s failure to warn was

a proximate cause of Mrs. Cipollone’s injuries, should be set aside.

We nonetheless discuss most of these issues because they are

12. As is indicated by the jury’s answer to special interrogatory number

7, Liggett owed a duty to warn consumers of the health effects of smoking

prior to 1966. This issue should not be re-tried; the existence of this duty has

been properly established. See infra at 560.

37a

Appendix A

important for a proper retrial.

First, Liggett contends that it was under no duty to warn

of the dangers of cigarettes because their dangers were commonly

understood. We find that there is no basis for so holding as a

matter of law, and that as a matter of fact the jury found

otherwise.'?

Liggett next argues that (1) the district court erred in

instructing the jury on Liggett’s duty to disclose the results of

its scientific tests and (2) the district court’s use of the word

“‘obviousness’’ confused the jury. We find both of these

contentions to be without merit. Under New Jersey law, Liggett

had a duty to conduct research, and to disclose significant dangers

discovered as a result of that restarch. See Feldman v. Lederle

Laboratories, 97 N.J. 429, 453-55, 479 A.2d 374, 386-88 (1984).

Moreover, there was nothing confusing about the district court’s

use of the word ‘‘obvious.’’ The jury had no reason to think that

it might be deciding an ‘‘open and obvious’’ danger case, see,

e.g., Shaffer v. AMF, Inc., 842 F.2d 893 (6th Cir.1988), and

therefore it could not have been prejudically confused. '*

13. The district court’s charge instructed the jury to:

consider the extent to which ordinary consumers prior to 1966

were aware that cigarette smoking posed sign.. -ant health

risks. . . The obviousness of a product’s danger—as measured

by such general consumer knowirdge, not by a particular

plaintiff's knowledge—is one element to be considered in

order for you to determine whether u duty to warn exists.

2 J.A. 105-06.

14. Liggett also contends that the factors listed by the district court as

"relevant to determining whether a duty to warn exists were superfluous and

prejudicial. We find this argument to be frivolous.

38a

Appendix A

Liggett’s more substantial contention has to do with the

district court’s instruction on causation, which defines proximate

cause'’ as follows:

a cause which necessarily set the other causes in

motion and was a substantial contributing factor

in bringing about the injury. Proximate cause is

defined as a cause which naturally and probably

led to and might have been expected to produce

the result complained of.

2 J.A. 91-92. The district court also instructed the jury that ‘‘there

may be two or more concurrent and directly cooperative and

efficient proximate causes of an injury’’ if the defendant was ‘‘a

substantial contributing factor’’ in the plaintiff’s injuries. 2 J.A.

93.

It is not exactly clear what fault Liggett finds with this

instruction. Liggett claims that: ‘‘Plaintiff was required to prove

that ‘but for’ Liggett’s claimed failure to warn Mrs. Cipollone

would not have been injured—that had Liggett provided a warning

prior to 1966 Mrs. Cipollone would have quit smoking or never

started smoking, and by doing so, Mrs. Cipollone would have

avoided lung cancer in 1981.’’ Liggett Br. at 50. There are three

possible interpretations of Liggett’s objection.

First, Liggett may be arguing that, even if plaiggiff proves

by a preponderance of the evidence that the totality of Liggett’s

15. As the district court carefully instructed, this case involves two distinct

causal inquiries: first, whether Liggett’s violation of legal norms caused Mrs.

Cipollone to smoke, and second, whether the cigarettes that Mrs. Cipollone

smoked as a result of Liggett’s violations proximately caused her cancer.

39a

Appendix A

violation of legal norms—its failure to warn and breach of

warranty—was a ‘‘but for’’ cause of Mrs. Cipollone’s lung cancer,

the jury could not find for the plaintiff with respect to any

individual Liggett violation unless the plaintiff demonstrated by

a preponderance of the evidence that that individual violation

caused Mrs. Cipollone’s lung cancer. This bifurcation of Mr.

Cipollone’s lawsuit into two independent claims might allow

Liggett to escape liability for the totality of its wrongful conduct.

We find this argument untenable.

As a substantive matter, Liggett is liable if its behavior

proximately caused Mrs. Cippolone’s cancer. For pleading

purposes, Mr. Cipollone divided Liggett’s conduct up into different

pre-established legal categories, i.e. a tort-based failure to warn

claim and a contract-based express warranty claim. Although the

elements of proof necessary to prove liability under these two

legal theories differ, the procedural pleading and proof

requirements do not transform Mr. Cipollone’s allegations into

two completely different lawsuits. Thus, Mr. Cipollone does not

have to prove that each legal violation proximately caused his

wife’s cancer. He need only prove that the totality of Liggett’s

wrongful behavior, which as doctrinal matter is divided into a

tort and contract claim, proximately caused her cancer.

Second, Liggett may be arguing that Mrs. Cipollone’s conduct

would have caused her cancer no matter what Liggett did, and

that therefore Liggett’s conduct cannot be considered the cause

of Mrs. Cipollone’s injury. This argument is plainly inconsistent

with the established jurisprudence of concurrent causation. The

**substantial factor’’ test has traditionally been used in concurrent

Cause cases, i.e. cases in which there are two or more causes each

40a

Appendix A

of which is sufficient to cause the injury.'* See Keeton et al.,

Prosser and Keeton on The Law of Torts 266-68 (Sth ed. 1984).

Our preemption decision makes this case quite comparable to a

concurrent cause situation. Liggett’s pre-1966 behavior might have

been enough, by itself, to cause Mrs. Cipollone’s cancer, and its

post-1965 behavior might also have been enough to cause the

cancer. Thus, just as it is unfair to let one tortfeasor completely

escape liability for his fire merely because another tortfeasor caused

another fire, so it is unfair to let Liggett completely escape liability

for its pre-1966 behavior merely because its post-1965 behavior

(or that of its codefendants), which was immunized from scrutiny

at the trial, might also have caused enough damage, by itself,

to kill her.

Third, Liggett may be arguing that Mr. Cipollone had to

prove, to a greater certainty than the district court’s instruction

required, that Liggett’s failure to warn caused her injuries. Under

this theory, the fact that the defendant’s conduct might have been

a substantial factor in causing Mrs. Cipollone’s cancer would not

be enough; rather, Mr. Cipollone would have had to prove, by

a preponderance of the evidence, that if Liggett had not breached

its warranty and if it had warned consumers of the dangers of

smoking, Mrs. Cipollone would not have contracted cancer. In

other words, Liggett argues that plaintiff had to prove that ‘‘but

16. For example, two fires merge and the combined fire destroys the

plaintiff's property, although either fire would have done so alone. See Anderson

v. Minneapolis, St. Paul & Sault Ste. Marie Ry., 146 Minn. 430, 179 N.W.

45 (192u). In such a case, one has to assign responsibility to either fire or no

liability would be assigned because each defendant could prove, individuaily,

that plaintiff's property would have been destroyed even if he had acted non-

tortiously. Thus, liability is assigned even though each defendant’s conduct could

be seen as irrelevant to the ultimate outcome.

4la

Appendix A

for’’ Liggett’s conduct, the injury would not have occurred.'’ We

find this argument to be inconsistent with New Jersey law.

Liggett cites Campos v. Firestone Tire and Rubber Co., 98

N.J. 198, 485 A.2d 305 (1984), which it claims rejected the

substantial factor test and instead require a ‘‘but for’’ test in failure

to warn situations. In Campos, the New Jersey Supreme Court

17. Some decisions and commentators have used statistics to elaborate on

the meaning of ‘‘but for” causation, see, e.g., In re Agent Orange Prod. Liab.

Litig., 597 F.Supp. 740, 833-42 (E.D.N.Y. 1984), Orloff, Theories of Cancer

and Rules of Causation, 27 Jurimetrics 255 (Spring 1987). This approach defines

“but for’’ causation as at least a 50% chance that the defendant’s conduct

caused the injury in question. It is not clear to us that this is the instruction

that Liggett is requesting. Nor is it clear to us that this is the only way to define

““but for’’ causation. The leading hornbook on Torts states that “‘(the] question

of [causation in] ‘fact’ is one upon which all the learning, literature and lore

of the law are largely lost. It is a matter upon which lay opinion is quite as

competent as that of the most experienced court. For that reason, in the ordinary

case, it is peculiarly a question for the jury.’’ Keeton, et al., Prosser and Keeton

on The Law of Torts 264-65 (Sth ed. 1984). By seeking to define causation

more numerically (i.e., at least 50% probability), the statistics-oriented

commentators may be advocating a substantive change that New Jersey would

not endorse. We are not convinced that when a jury determines that ‘‘but for’’

a defendant’s conduct, the injury would not have occurred, it is determining

that the chances of that injury being the result of defendant’s conduct are 50%

or greater. Traditionally, jury instructions have been in words, not numbers.

Prosser and Keeton seems to suggest that a jury’s determination of causation

defies numerical analysis, and New Jersey may want to keep it that way. Thus,

with some trepidation, but with considerable support, we offer the following

discussion of causation without an airtight definition of what ‘‘but for’’ causation

is. For purposes of the discussion, it is sufficient that the reader recognize that

a ‘‘but for’’ test requires more direct linkage between defendant's conduct and

the injury than does the “‘substantial factor’’ instruction given by the district

court. See also Calabresi, Concerning Cause and the Law of Torts: An Essay

’ for Harry Kalven, Jr., 43 U.Chi.L.Rev. 69, 84-91 (1975).

42a

Appendix A

found that the plaintiff had the burden of proving that a proper

warning would have prevented the injury caused by a tire assembly

explosion. The plaintiff was arguably aware of the need to protect

himself by keeping the tire in a safety cage, but he reached into

the cage and was injured when the assembly exploded. The court

quoted with approval from an article by Dean Keeton:

If the basis for recovery under strict liability is

inadequacy of warnings or instruction about

dangers, then plaintiff would be required to show

that an adequate warning or instruction would have

prevented the harm.'*

However, the court in Campos did not reverse the jury’s

verdict for the plaintiff. Instead, it remanded noting that ‘‘there

may be some question whether plaintiff sustained his burden of

proving causation, see Brown v. United States Stove Co., [98 N.J.

155, 484 A.2d 1234 (1984)].’’ Campos, 98 N.J. at 211, 485 A.2d

at 312. Brown seems to endorse a substantial factor test: ‘‘a

tortfeasor will be held answerable if its ‘negligent conduct was

a substantial factor in bringing about the injuries.’ ’’ Brown, 98

N.J. at 171, 484 A.2d at 1243 (citations omitted). Thus, although

the language quoted from Deen Keeton’s article in Campos

Suggests that New Jersey might endorse a ‘‘but for’’ test in failure

to warn cases, the citation to Brown indicates to the contrary.

Subsequent New Jersey cases interpreting Campos also indicate

to the contrary.

In Hull v. Getty Refining & Marketing Co., 202 N.J.Super.

18. Keeton, Products Liability—Inadequacy of Information, 48 Tex.L.Rev.

398, 414 (1979).

43a

Appendix A

461, 467, 495 A.2d 445, 448 (App.Div.1985), and Vallillo v.

Muskin Corp., 212 N.J.Super. 155, 159-60, 514 A.2d 528, 530

(App.Div.1986), the New Jersey Superior Court cited Campos

to support a substantial factor test. Determining proximate

causation requires determining ‘‘whether [the] breach of a duty

enforceable within strict product liability against any defendant

constituted a substantial factor in the causation of plaintiff’s

accident.’” Hull, 202 N.J.Super. at 467, 495 A.2d at 448.

Describing why it was overturning a plaintiff’s verdict (not

remanding, as the court did in Campos ‘‘[a] jury could have

determined that the lack of a proper warning to rely on the cage’s

protection and to keep his arm out of the cage was at least a

factor materially contributing to the happening of the accident.’’

212 N.J.Super. at 160, 514 A.2d at 530. In the case at bar, a

jury could determine that Liggett’s violations constituted a factor

materially contributing to her injury.

New Jersey has also used the substantial factor test in

nonfeasance situations. In Evers v. Dollinger, 95 N.J. 399, 471

A.2d 405 (1984), the New Jersey Supreme Court held that it was

error to enter judgment for a doctor who failed to operate on

a tumor for seven months. The court reasoned that, although

the doctor’s conduct did not cause the cancer, the seven-month

delay could have been a substantial factor in causing the condition

from which the plaintiff eventually suffered. In Hake v.

Manchester Township, 98 N.J. 302, 486 A.2d 836 (1985), the same

court held that plaintiff could establish causation in a wrongful

death action by showing that defendant’s negligent conduct

negated a substantial possibility that plaintiff might have been

saved after attempting to kill himself. Neither of these was a

concurrent causation case and in neither case would defendant’s

. conduct by itself have caused the injury. Yet, each defendant’s

conduct substantially increased the probability of the plaintiff’s

44a

Appendix A

injury. In such situations the New Jersey courts have allowed

recovery.

In light of these cases, we conclude that the district court

did not erroneously instruct the jury as to the proximate cause

requirement in Mr. Cipollone’s failure to warn claim. The district

court should again give a ‘‘substantial factor’’ charge on retrial.'*

VI. DID THE DISTRICT COURT ERR IN FAILING TO

INSTRUCT THE JURY THAT MRS. CIPOLLONE’S

NONRELIANCE ON LIGGETT’S SAFETY

ADVERTISEMENTS WOULD PREVENT HER FROM

RECOVERING ON HER EXPRESS WARRANTY

CLAIM?

We turn now to another major area of dispute between the

Parties, one that implicates the conceptual basis of express warranty

law. Mr. Cipollone brought his express warranty claim under

U.C.C. § 2-313(1), which provides:

19. We note that, notwithstanding our preemption decision, if plaintiff

argues an addiction theory, a jury might be able to consider Mrs. Cipollone’s

post-1965 smoking as well as her pre-1966 smoking for purposes of determining

whether Liggett’s tortious conduct caused Mrs. Cipollone’s injury. If the jury

believes that Liggett’s pre-1966 conduct proximately caused Mrs. Cipollone to

smoke cigarettes pre-1966 and that Mrs. Cipollone became addicted as a result

of that smoking, then those post-1965 cigarettes smoked as a result of the

addiction should be considered in discerning whether Liggett’s conduct

proximately caused Mrs. Cipollone’s lung cancer. The Surgeon General has

recently concluded that ‘‘[s}cientists in the field of drug addiction now agree

that nicotine, the principal pharmacologic agent that is common to all forms

of tobacco, is a powerfully addicting drug.’’ U.S. Dep’t Health & Human Serv.,

The Health Consequences of Smoking: Nicotine Addiction—A Report of the

Surgeon General (1988)—.

4Sa

Appendix A

(1) Express warranties by the seller are created

as follows:

(a) Any affirmation of fact or promise made

by the seller to the buyer which relates to the goods

and becomes part of the basis of the bargain creates

an express warranty that the goods shall conform

to the affirmation or promise. (b) Any description

of the goods which is made part of the basis of

the bargain creates an express warranty that the

goods shall conform to the description.

N.J.S.A. § 12A:2-313(1) (emphases added). With respect to this

issue, the district court gave the following instructions to the jury:

[P}laintiff must prove . . . that Liggett, prior to

1966, made one or more of the statements claimed

by the plaintiff and that such statements were

affimations of fact or promises by Liggett .. .

[and] that such statements were part of the basis

of the bargain between Liggett and consumers like

Rose Cipollone ... .

The law does not require plaintiff to show that

Rose Cipollone specifically relied on Liggett’s

warranties.

Ordinarily a guarantee or promise in an

advertisement or other description of the goods

becomes part of the basis of the bargain if it would

naturally induce the purchase of the product and

no particular reliance by the buyer on such

Statement needs to be shown. However, if the

46a

Appendix A

evidence establishes that the claimed statement

cannot fairly be viewed as entering into the bargain,

that is, that the statement would not naturally

induce the purchase of a product, then no express

warranty has been created.

4 J.A. at 232-34.

Liggett contends that this interpretation of ‘‘part of the basis

of the bargain’’ is flawed because the jury should also have been

instructed that Mrs. Cipollone’s nonrsliance on the advertisements

would preclude those advertisements from becoming ‘‘part of the

basis of the bargain.’’ Liggett argues that the express warranty

verdict must therefore be set aside. Although our interpretation

of the precise meaning of ‘‘reliance’’ differs somewhat from

Liggett’s, we agree.*°

20. Initially, we emphasize that a representation made by a seller is not

an express warranty if i is made in such a manner that both the seller and

the buyer should understand to be a representation upon which the buyer will

not rely. “*{A}ll descriptions by merchants must be read against the applicable

trade usages. .. ."’ N.J.S.A..§ 12A:2-313 U.C.C. Comment 5. A representation

made in a manner that is generally recognized not to be a basis upon which

purchasers make a decision to purchase goods cannot be a warranty when read

against ‘‘applicable trade usages.’’ This requirement is in accord with the

traditional common law ‘‘puffing’’ exception in the law of contracts. See H.

Hunter, Modern Law of Contracts: Breach and Remedies 44.02(3), at 4-7 to

4-8 (1986 & Supp.1989). But Liggett has not contended, and we do not think

it could, that its advertisements to consumers are generally recognized as not

forming the basis upon which cigarette purchasing decisions are made. If such

were the case, Liggett would not have spent millions of dollars on advertising.

47a

Appendix A

A.

Authority on the question whether reliance is a necessary

element of section 2-313 is divided. Although a few courts have

held that reliance is not a necessary element of séction 2-313,”'

the more common view has been that it is, and that either a buyer

must prove reliance in order to recover on an express warranty

or the seller must be permitted to rebut a presumption of reliance

in order to preclude recovery.** Some treatise writers support this

interpretation.*» No New Jersey couri or panel of this court has

squarely addressed the question. **

21. See, e.g., Winston Indus., Inc. v. Stuyvesant Ins. Co., 317 S0.2d 493

(Civ.App.Ala.) (purchaser permitted to sue under § 2-313 for breach of a

warranty that he never received), cert. denied, 294 Ala. 775, 317 So.2d $00 (1975).

22. See, e.g., Royal Typewriter Co. v. Xerographic Supplies Corp., 719

F.2d 1092, 1101 (11th Cir. 1983) (**Absence of reliance will negate the existence

of an express warranty.’’); Scaringe v. Holstein, 103 A.D.2d 880, 477 N.Y.S.2d

903 (1984) (notice that shift did not work demonstrated that plaintiff could

not have relied on an alleged warranty that the used car was in “‘excellent

condition’); Indust-Ri-Chem Lab., Inc. v. Par-Pak Co., 602 S.W.2d 282, 293

(Tex.Ct.App. 1980) (‘‘Obviously, if the buyer knows that a representation of

the seller is untrue, that representation cannot be a part of the basis of the

bargain.’’).

23. See, e.g., 1 J. White & R. Summers, Uniform Commercial Code § 9-5,

at 448, 455 (3d ed. 1988); W. Hawkland, Uniform Commercial Code Series

§ 2-313:05, at 299-300 (1983 & Supp.1987). Professor White has written an

amicus brief on this issue, consistent with his treatise position, on behalf of

Lorillard, Philip Morris, R.J. Reynolds, American Tobacco Co. and Brown

& Williamson Tobacco Co.

24. In their briefs, the parties discuss five New Jersey and Third Circuit

cases: Jackson v. Muhlenberg Hospital, 96 N.J.Super. 314, 232 A.2d 879 (Law

(Cont'd)

48a

Appendix A

The history of section 2-313(1)(a), although informative, fails

(Cont'd)

Div. 1967), rev'd on other grounds, $3 N.J. 138, 249 A.2d 65 (1969) (per curiam);

Collins v. Uniroyal, Inc., 126 N.J.Super. 401, 315 A.2d 30 (App. Div.1973)

(per curiam), aff'd, 64 N.j. 260, 315 A.2d 16 (1974) (per curiam); Gladden

v. Cadillac Motor Car Division, 83 N.J. 320, 416 A.2d 394 (1980); Pritchard

v. Liggett & Myers Tobacco Co., 350 F.2d 479 (3d Cir.1965); and Henry Heide,

Inc. v. WRH Products Co., 766 F.2d 105 (3d Cir.1985). We discuss Gladden

and Pritchard in the text. See infra at 566. We do not find the other cases

to be particularly helpful.

In Jackson, the Superior Court held that a hospital patient who contracted

hepatitis from infected blood supplied by a bicod bank could sue the blood

bank for its breaci. of express warranty to the hispital. Mr. Cipollone stresses

the sentence stating that ‘“‘the patient ... probably never saw the label

[constituting the warranty] on the container of blood [that infected her].’’ 96

N.J.Super. at 330, 232 A.2d at 888. The case, however, is inapposite because

the patient in that case was suing not under section 2-313 but under N.J.S.A.

§ 12A:2-318, which permits third party beneficiaries to sue for breach of express

warranty. Jackson did not say that the Aospital’s reliance was irrelevant, yet

that is the operative question. That a third party beneficiary may sue for breach

of express warranty even if she did not rely on the affirmation of fact does

not imply that the affirmation would constitute a warranty even if the buyer

had not relied on it.

In Collins, the Superior Court heid that a tire manufacturer's effort to

limit a breach of express warranty remedy to replacement of the tires was

unconscionable and hence unenforceable. The limitation on remedy was

contained in a written warranty that also guaranteed the tires against ‘‘road

hazards.’’ The court did not discuss the meapiig of *‘the basis of the bargain’”’

but focused on the unconscionability of the remedy limitation. The Superior

Court deemed one of the tire manufacturer's advertisements relevant to the

case, in part because ‘‘the advertisement helped to explain the scope and intent

of the ‘road hazard’ part of the warranty."’ 126 N.J.Super. at 408, 315 A.2d at 34.

(Cont'd)

49a

Appendix A

to give a clear answer as to whether reliance is required. Section

(Cont'd)

Mr. Cipollone contends that Collins supports his position that reliance is

not an element of section 2-313 because the court never discussed whether the

buyer relied on the written warranty; the court merely stated that ‘‘[t}he warranty

. . Was given to [the buyer] at the time he bought the tires."’ /d. at 405, 315

A.2d at 33. Despite Mr. Cipollone’s request, we decline to base our decision

on the New Jersey Superior Court’s failure to discuss an issue.

Liggett contends that Collins supports its position because the Superior

Court, immediately before its discussion about the advertisements stated that

“*(t}he jury could have inferred ... that [the buyer had] relied’’ on the

advertisement. /d. at 408, 315 A.2d at 34. We hesitate to place too much weight

on this remark for three reasons.

First, as noted above, the Superior Court did not discuss the relevance

of the buyer’s reliance, it merely noted that the jury could have inferred that

the buyer had relied and then continued win its discussion in a new sentence

that began, ‘‘More importantly, the advertisement helped to explain the scope

and intent of the ‘road hazard’ part of the warranty... .’’ /d.

Second, the issue in Collins that the Superior Court discussed was whether

the remedy limitation was unconscionable; that the buyer’s reliance on an

advertisement making broad claims about the safety of the product was thought

relevant to the issue of unconscionability does not necessarily imply that the

buyer’s nonreliance on a reasonable advertisement would have precluded the

advertisement from becoming part of the manufacturer’s express warranty.

Third, the New Jersey Supreme Court in its short per curiam opinion

affirming the Superior Court further muddied the waters. In a statement obliquely

favorable to Mr. Cipollone’s position, the Supreme Court addressed the issue

in terms of what would be ‘‘the natural reliance and the reasonable expectation

of the purchaser flowing from the warranty,"’ 64 N.J. at 263, 315 A.2d at 18,

thus suggesting, as Mr. Cipollone argues, that the significant factor is what

a purchaser would reasonably infer from the affirmation of fact or promise

’ rather than what the purchaser in the case-at-bar actually inferred, and hence

(Cont'd)

50a

Appendix A

2-313(1)(a) is an adaption of section 12 of the Uniform Sales Act.*°

A comparison of the two sections reveals that they are

(Cont'd)

relied on. However, the Supreme Court also discussed what ‘‘the purchaser

of a tire buying it because’ of the warranty would think, id. (emphasis added),

hence suggesting that reliance had some role to play in discerning whether the

warranty was unconscionable.

In light of all of these offsetting considerations, we do not believe that

Collins is helpful in analyzing the issue before us.

In Heide, the issue was whether a chemical company’s specification sheet,

which listed several physical properties of the company’s plastic, constituted

an express warranty. This court analyzed the issue as follows:

The facts as stipulated show that the . . . sheet was not the

basis of any bargain between [the chemica! company and the

manufacturer. The chemical company] gave no express

warranty in this case that the [plastic] would conform to the

. . Sheet, and thus [the plaintiff] cannot be the beneficiary

of any such warranty.

766 F.2d at 112. The court did not say why it was holding that the sheet did

not constitute an express warranty. The word ‘‘reliance’’ enters the opinion

only through a recital of the chemical company’s contention. /d. We therefore

glean little guidance from Heide.

25. Section 12 of the Sales Act provides:

Any affirmation of fact or any promise by the seller relating

to the goods is an express warranty if the natural tendency

of such affirmation or promise is to induce the buyer to

purchase the goods, and if the buyer purchases the goods

relying thereon. No affirmation of the value of the goods,

nor any statement purporting to be a statement of the seller’s

opinion only shall be construed as a warranty.

Sla

Appendix A

substantially the same except for the replacement of section 12’s

express reliance requirement with section 2-313(1)(a)’s basis of

the bargain requirement. The district court reasoned that the

omission of the word ‘‘reliance from section 2-313(1)(a), in light

of section 12’s use of that word, implied that reliance was no

longer an element of express warranties. See 693 F.Supp. at 213.

Liggett contends that ‘if U.C.C. § 2-313 wrought the radical

change in New Jersey warranty law that the trial court has read

into it,’’ then ‘‘{o]ne would think that the New Jersey Study

Comments would have at least made reference to it.’’ Liggett Br.

at 19. We note in this regard that the New Jersey Study Comment

One to section 12A:2-313 states that ‘‘[t]his section of the Code

is comparable to Section 12 of the Sales Act (N.J.S.A. 46:30-18),

except that it characterized the warranties of sample and

description as express warranties.’’ There is no reference to the

reliance issue.

Liggett argues that reliance must have some place in the ‘‘basis

of the bargain’’ determination. Thus, even if reliance should be

assumed, based on what ‘‘would reasonably induce the purchase

of a product,”’ a defendant must have the opportunity to prove

non-reliance. The position finds some support in the U.C.C.:

comments. U.C.C. Official Comment,3 states:

In actual practice affirmations of fact made by

the seller about the goods during a bargain are

regarded as part of the description of those goods;

hence no particular reliance on such statements

need be shown in order to weave them into the

fabric of the agreement. Rather, any fact which

is to take such affirmations, once made, out of

the agreement requires clear affirmative proof. The

issue normally is one of fact. (Emphasis added.)

S2a

Appendix A

Moreover, comment 8 states that ‘‘all of the statements of the

seller [become part of the basis of the bargain] unless good reason

is shown to the contrary.’’ (Emphasis added.) The plain language

of these comments supports Liggett’s opposition, at least to the

extent it indicates that a defendant must be given some opportunity

to show that the seller’s statements were not meant to be part

of the basis of the bargain.

This court has interpreted comment 3 before, in another

tobacco case, Pritchard v. Liggett & Myers Tobacco Co., 350

F.2d 479 (3d Cir.1965) (applying Pennsylvania law). In a footnote

to a concurring opinion, Judge Freedman stated the following:

The comment by the drafters of the [U.C.C.]

make it clear that what was formerly described as

reliance [under § 12 of the Uniform Sales Act] is

now absorbed as a factor which is made a basis

of the bargain. Comment 3 to § 2-313 states that

where a statement is made during a bargain no

particular evidence of reliance need be shown, but

that it remains a question of fact whether evidence

introduced by the defendant is sufficient to show

non-reliance.

350 F.2d at 41 n. 7 (Freedman, J., concurring).** Pritchard

therefore reads the last sentence in comment 3 (‘‘[A]ny fact which

is to take such affirmations, once made, out of the agreement

requires clear affirmative proof.’’) as qualifying the sentence that

precedes it (“‘{NJo particular reliance need be shown.’’) In other

26. The court explicitly noted that Judge Freedman’s concurrence

represented ‘‘the majority view on the question of reliance,’’ Pritchard, 350

F.2d at 487.

53a

Appendix A

words, even though ‘‘no particular reliance need be shown,”’’ the

seller can ‘‘take [an] affirmation . . . out of the agreement’’ by

showing that the buyer did not rely.

This interpretation of comment 3 appears consistent with that

of the New Jersey Supreme Court. In Gladden v. Cadillac Motor

Car Division, 83 N.J. 320, 416 A.2d 394 (1980), the Court held

that a manufacturer’s attempted limitation of its damages for

breach of its express warranty could be given no effect in light

of the ‘‘linguistic maze’’ of the warranty. See id. at 333, 416 A.2d

at 401. The Court cited Comment 3, stating that ‘‘[pjarticular

reliance on such statements of description or quality need not

be shown.”’ Jd. at 325, 416 A.2d at 396. The Court thus expressly

rejected the view that the plaintiff has the burden of proving

reliance on the seller’s affirmation of fact, promise or description.

Nonetheless, the statement that ‘‘particular reliance need not be

shown,’’ made in the context of a discussion about Comment

3, does not imply that a defendant cannot defeat a warranty claim

by showing that the affirmation of fact, promise or description

was not part of the basis of the bargain. We believe that Gladden

States not that reliance is irrelevant, but only that the plaintiff

need not prove reliance.

A final argument in suppert of a reliance requirement is found

in the amicus brief. Without a reliance requirement, one runs

the risk of draining the term ‘‘basis of the bargain’’ of all meaning,

because the buyer’s subjective state of mind becomes completely

irrelevant. The district court instructed the jury that a statement

could be considered part of the basis of the bargain if it ‘‘would

naturally induce the purchase of the products.’’ This instruction

is completely objective and would permit a buyer to sue for breach

- Of express warranty even if the seller’s warranties were

advertisements made in another state or country, and even if the

S4a

Appendix A

buyer did not hear of the claims in these advertisements until the

day that she walked into an attormey’s office to bring suit for

personal injury. It strains the language to say that a statement

is part of the ‘‘basis’’ of the buyer’s ‘‘bargain,’’ when that buyer

had no knowledge of the statement’s existence.

The above arguments notwithstanding, it is possible to read

the ‘‘basis of the bargain’’ requirement as requiring some subjective

inducement of the buyer, without requiring a reliance finding.

Requiring that the buyer re/y on an advertisement, whether by

imposing this burden initially on the buyer bringing suit, or by

allowing the seller to rebut a presumption of reliance, puts a heavy

burden on the buyer—a burden that is arguably inconsistent with

the U.C.C. as a whole, with other comments to section 2-313

in particular, and with several commentators’ suggestions in this

area.”’

The reliance requirement does not comport well with U.C.C.

Official Comment 7 to section 2-313. Comment 7 states that ‘‘[i]f

language is used after the closing of the deal . . . the warranty

becomes a modification, and need not be supported by

consideration if it is otherwise reasonable and in order... .’’

N.J.S.A. § 12A:2-313 U.C.C. Comment 7. If a post-closing

promise—on which, by definition, a seller cannot rely in deciding

27. See, e.g., Shanker, The Seller’s Contractual Obligation Under U.C.C.

2-313 to Tell the Truth, 38 Case W.Res.L.Rev. 40 (1987-88); Heckman,

“*Reliance’’ or ‘‘Common Honesty of Speech’’: The History and Interpretation

of Section 2-313 of the Uniform Commercial Code, 38 Case W.Res.L.Rev. |

(1987-88); Coffey, Creating Express Warranties Under the U.C.C.: Basis of

the Bargain—Don’t Rely on It, 20 U.C.C.L.J. 115 (1987); Lewis, Toward a

Theory of Strict ‘‘Claim’’ Liability; Warranty Relief for Advertising

Representations, 47 Ohio St.L.J. 671 (1986).

55a

Appendix A

to make a purchase—can create a warranty, then it is difficult

to see why a pre-closing promise can create a warranty only if

relied upon.

Additionally, a reliance requirement seems inconsistent with

U.C.C. Official Comment 4 to section 2-313. Comment 4 states

that ‘‘the whole purpose of the law of warranty is to determine

what it is that the seller has in essence agreed to sell.’’ N.J.S.A.

§ 12A:2-313 U.C.C. Comment 4. Reliance is irrelevant to what

a seller agrees to sell.**

In light of these seemingly inconsistent mandates on the

reliance question, some might argue that it is foolish to try to

reconcile what is patently inconsistent. We reject this suggestion

however, because we find it feasible to reconcile the competing

arguments, and we believe that the New Jersey Supreme Court

would want us to try. We believe that the most reasonable

construction of section 2-313 is neither Liggett’s reliance theory,

which fails to explain how reliance can be relevant to ‘‘what a

seller agreed to sell,’’ or the district court’s purely objective theory,

28. For example, imagine a tire merchant describing a tire to three different

prospective purchasers, each listening to his sales talk at the same time. The

seller guarantees that the tire will (1) be safe for use even in heavily loaded

vehicles; (2) last at least 20,000 miles; and (3) be the same style tire sold with

a Rolls Royce. The first purchaser buys the tire relying on the seller’s safety

warranty. The second buys the tire relying on the seller’s durability warranty.

The third buys the tire relying on the seller’s style warranty. None of the

purchasers communicates to the seller the reason why he or she is purchasing

one of the tires, although the reason for the purchase is communicated to the

buyer’s spouse, who will later come forward to testify truthfully regarding what

the buyer relied on when making the purchase. It is implausible that each buyer

has a different warranty, and that the second buyer, but not the first or third

* buyers, can sue if the tire wears out before 20,000 miles.

56a

Appendix A

which fails to explain how an advertisement that a buyer never

even saw becomes part of the ‘‘basis of the bargain.’’ Instead,

we believe that the New Jersey Supreme Court would hold that

a plaintiff effectuates the ‘‘basis of the bargain’’ requirement of

section 2-313 by proving that she read, heard, saw or knew of

the advertisement containing the affirmation of fact or promise.”’

Such proof will suffice ‘‘to weave’’ the affirmation of fact or

promise ‘‘into the fabric of the agreement,’’ U.C.C. Comment

3, and thus make it part of the basis of the bargain.*® We hold

that once the buyer has become aware of the affirmation of fact

or promise, the statements are presumed to be part of the ‘‘basis

of the bargain’’ unless the defendant, by ‘‘clear affirmative proof,’’

shows that the buyer knew that the affirmation of fact or promise

was untrue. We believe that by allowing a defendant to come

forward with proof that the plaintiff did not believe in the

warranty,’' we are reconciling, as the New Jersey Supreme Court

29. The burden that we place on the plaintiff stems in part from the fact

that this case involves neither a written warranty delivered to the purchaser

in connection with a sale nor an oral affirmation of fact or promise made to

the purchaser in person by the seller. In both of those situations there is no

question that the plaintiff has knowledge that the alleged warranty exists.

30. This interpretation of section 2-313 is also consistent with decisions

of courts that have held that section 2-313 does ‘‘not . . . require a strong showing

of reliance.”’ Sessa v. Riegle, 427 F.Supp. 760, 766 (E.D.Pa.1977), aff'd, 568

F.2d 770 (3d Cir.1978). Because the district court’s decision in Sessa was affirmed

by judgment order, and not by a reported opinion, the decision is not binding

precedent on this Court. See Third Circuit IOP Chapter 8C.

31. If the defendant proves that the buyer did not believe in the warranty,

the plaintiff should then be given the opportunity to show that the buyer

nonetheless relied on the warranty. It is possible to disbelieve, but still rely on,

the existence of a warranty. In this sense, the buyer can ‘‘buy’’ a lawsuit. Thus,

(Cont'd)

57a

Appendix A

would want us to, the U.C.C. comments, the U.C.C. case law,

and traditional contract principles, which serve as the background

rules to the U.C.C.”

As indicated above, Comment 4 and Comment 7, as well

as the largely dominant objective theory of contracts, militate

(Cont'd)

if the buyer disbelieved the warranty, but could prove that she was relying on

it when she bought the product for stipulated damages—for example, a refund—

or economic damages—the difference between ‘‘the value of the goods accepted

and the value of the goods would have had if they had been warranted,’’ U.C.C.

§ 2-714. Such a buyer could not recover consequential damages, however. She

would be barred by both U.C.C. § 2-715 (‘*[I}f [the injured person] discover(s]

the defect prior to his use, the injury would not proximately result from the

breach of warranty.’’), and traditional contract principles, under which a buyer

has a duty to mitigate damages and cannot recover for damages that she ‘‘could

have avoided without undue risk, expense or humiliation,’’ Restaternent (Second)

of Contracts § 350(1) (1965).

Other courts have noticed the distinction between knowledge and reliance

as well. See Royal Business Machines v. Lorraine Corp., 633 F.2d 34, 44 (7th

Cir.1980) (‘*The situation of the parties, their knowledge and reliance, may be

expected to change .. . . "’ (emphasis added)). We emphasize that we are not

adopting Liggett’s rebuttable presumption of reliance theory. Reliance only comes

into play if, after the defendant has proved non-belief, the plaintiff then tries

to prove reliance despite non-belief, the burden is on the plaintiff to prove reliance

despite non-belief and if she meets that burden she can collect economic damages.

32. N.J.S.A. 12A:1-103 states:

Unless displaced by the particular provisions of this Act, the

principles of law and equity, including the law merchant and

the law relative to capacity to contract, principal and agent,

estoppel, fraud, misrepresentation, duress, coercion, mistake,

bankruptcy or other validating or invalidating cause shall

supplement its provisions.

58a

Appendix A

in favor of interpretation of express warranty that ignores the

buyer’s subjective state of mind. Under the extreme version of

this theory apparently adopted by the district court, all the buyer

should have to show is what the seller agreed to sell. In other

words, an express warranty would be created when a seller makes

statements to the public at large that would induce a reasonable

buyer to purchase the product, even if the actual buyer never heard

those statements.’’ We find this result untenable, however. First,

as mentioned above, this interpretation drains all substantive

meaning from the phrase ‘‘basis of the bargain,’’ and would allow

a seller to collect even if that seller was unaware of the warranty

until she walked into her attorney’s office to file suit. Second,

this interpretation is difficult, if not impossible, to square with

other comments to the U.C.C. As discussed above, Comment

3 states that ‘‘no particular reliance on such statements need be

shown. . . . Rather, any fact which is to take such affirmations,

once made, out of the agreement requires clear affirmative proof.”’

Comment 8 states that ‘‘all of the statements of the seller [become

part of the basis of the bargain] unless good reason is shown to

the contrary.’’ Clearly, both Comment 3 and Comment 8 envision

some mechanism for overcoming the presumption that the seller’s

statements, even if heard by the actual buyer, are a basis of the

bargain.

Much of the case law supports this ‘‘belief’’ principle. A

33. The district court’s interpretation of the ‘‘basis of the bargain’”’

requirement is also objective in the weaker sense that in order to constitute

an express warranty, a seller’s statements must ‘‘nafuraily’’ induce the purchase

of the product,’’ 4 J.A. 234 (emphasis added). To that extent, we agree with

the district court. However, for reasons explained in the text, we do not believe

that either New Jersey or the drafters of the U.C.C. intended the buyer's

awareness of, or belief in, the statements to be completely irrelevant.

59a

Appendix A

Statement in the bill of sale that the goods are new does not

constitute an express warranty when both the buyer and the seller

knew that the statement was false. See Coffee v. Ulysses Irrigation

Pipe Co., 501 F.Supp. 239 (N.D. Tex.1980) When a buyer has

operated trucks before and knows that they need repairs, he cannot

sue in express warranty on the seller’s statement that the trucks

were in good condition. See Janssen v. Hook, | Ull.App.3d 318,

272 N.E.2d 385 (1971). ‘‘The same representation that could have

constituted an express warranty early in the series of transactions

might not have qualified as an express warranty in a later

transaction if the buyer had acquired independent knowledge as

to the fact asserted.’’ Royal Business Machines v. Lorraine Corp.,

633 F.2d 34, 44 (7th Cir.1980). See also Overstreet v. Norden

Laboratories, Inc., 669 F.2d 1286, 1291 (6th Cir.1982) (‘‘[A]

statement known to be incorrect cannot be an inducement to enter

a bargain.’’); Wendt v. Beardmore Suburban Chevrolet, Inc., 219

Neb. 775, 782, 366 N.W.2d 424, 429 (1985) (Car dealer’s statement

were not a basis of the bargain when plaintiff suspected that the

car had been in an accident and had his mechanic inspect it.).

Although these cases reject, to a certain extent, one traditional

contract principle, that terms should be construed objectively,

they embrace another traditional contract principle, that of looking

at the intention of the parties in light of the surrounding

circumstances. See 3 R. Anderson, Uniform Commercial Code

§ 2-313:36, at 29 (1983 & Supp.1987). The relevant intent is that

the statement be part of the basis of the bargain, and that, ‘‘as

in the case of any contract term, is a question of the intent of

the parties.’’ Jd. at 30.*

34. Although we have emphasized the relevance of a buyer's belief, our

. construction of section 2-213 can be read as simply fleshing out the more

(Cont'd)

Appendix A

Applying our interpretation of section 2-313 to the case at

bar, we conclude that the district court’s jury instructions were

erroneous for two reasons. First they did not require the plaintiff

to prove that Mrs. Cipollone had read, seen, or heard the

advertisements at issue. Second, they did not permit the defendant

to prove that although Mrs. Cipollone had read, seen, or heard

the advertisements, she did not believe the safety assurances

contained therein. We must therefore reverse and remand for a

new trial on this issue.

There is ample evidence from which a jury could conclude

that Mrs. Cipollone saw, read, or heard the advertisements. She

frequently listened to the Arthur Godfrey show, and frequently

read magazines that contained the advertisements. Thus, the

awareness question is not problematic. However, there is also

evidence that family members brought the hazards of smoking

to her attention. Thus Liggett might be able to prove that she

did not believe the advertisements that she saw.

Liggett contends that in light of the jury’s answers to special

commonly discussed reliance requirement with a framework of shifting

presumptions and burdens of proof. Thus, in the context of advertisements

claimed to be warranties, a plaintiff buyer must first prove that she saw the

advertisements. This raises a (rebuttable) presumption of belief, which in turn

raises an irrebuttable presumption of reliance. Next, a defendant seller may

rebut the presumption of reliance, but only by proving that the plaintiff

disbelieved the advertisement. C/. supra note 28. Successfully proving disbelief

creates a new rebuttable presumption by proving reliance directly. See supra

note 31. Whether our holding is read as imposing a “‘belief’’ requirement or

a ‘‘reliance’’ requirement thus is probably just a question of semantics, not

substance.

6la

Appendix A

verdict questions 10 and 12, which addresses Mrs. Cipollone’s

Cigarette use notwithstanding knowledge of the hazard, a new

trial is inappropriate because it is entitled to a verdict in its favor

on the express warranty claim as a matter of law.’* We disagree.

First, as explained above in part IV, the district court’s jury

instructions with respect to questions 10 and 12 did not limit the

inquiry into Mrs. Cipollone’s conduct to the pre-1966 period.

Because the only potential warranties at issue in this case are

Liggett’s pre-1966 advertisements, in order to find no warranties

the jury must find that Mrs. Cipollone disbelieved Liggett’s

pre-1966 advertisements, and it did not have an opportunity to

do so.

Questions 10 and 12 also do not ask specifically whether Mrs.

Cipollone knew that the advertisements were false. The jury’s

answers indicate that Mrs. Cipollone should have known cigarettes

were harmful, despite Liggett’s failure to warn. That does not

mean that she actually knew that cigarettes were harmful, when

Liggett was advertising to the contrary. The jury must be asked

whether she disbelieved the advertisements. This is an inquiry

distinct from (1) whether she should have disbelieved the

advertisements,’* and (2) whether it would have been unreasonable

to smoke had Liggett not been advertising that smoking was safe.

Consequently, Liggett is not entitled to rely on the jury’s answers

to these questions to preclude a new trial on the question whether

its advertisements constituted express warranties.

35. Liggett invokes the doctorine of ‘estoppel by verdict.’’ For the reasons

explained in the text, we do not find that doctrine applicable.

36. We note that if she should have disbelieved the advertisements it is

not likely that the advertisements would naturally induce the purchase of the

_ product.

62a

Appen

Vil. DID THE DISTRICT COUR® IN FAILING TO

INSTRUCT THE JURY THAT COMPARATIVE FAULT

PRINCIPLES APPLY TO AN EXPRESS WARRANTY

CLAIM?

A.

Liggett contends that New Jersey law permits a manufacturer

to assert a comparative fault to an express warranty products

liability suit and that the district court consequently erred in failing

to so instruct the jury. We agree that comparative fault principles

may be applicable in some express warranty cases, but we do not

believe that they are applicable here.

In Cintrone v. Hertz Truck Leasing & Rental Service, 45 N.J.

434, 212 A.2d 769 (1965), the plaintiff alleged that the brakes

on his employer’s leased truck failed, causing an accident. Cintrone

sued the lessor, alleging that the defendant had breached its

‘‘warranty that the vehicle was fit and safe for use. (Whether

the alleged warranty was express or implied was not specified.).’’

Id. at 438, 212 A.2d at 771. The defendant asserted that the

plaintiff could not recover because the problem with the truck’s

brakes was known to the plaintiff before the accident. The New

Jersey Supreme Court held that on the facts of the case the jury

could have concluded that the plaintiff ‘‘with knowledge of the

danger presented by the defective brakes failed to take the care

for his own safety which a reasonably prudent person would have

taken under the circumstances. Therefore, it would have been

improper for the trial court to have removed the defense of

contributory negligence from jury consideration.’’ Jd. at 459, 212

A.2d at 783.

In Maiorino v. Weco Products Co., 45 N.J. 570, 214 A.2d

63a

Appendix A

18 (1965) (per curiam) the New Jersey Supreme Court also held

that contributory fault was a defense to a breach of warranty

suit. In that case, the plaintiff injured himself while attempting

to open the glass container on his newly purchased toothbrush.

The plaintiff sued the manufacturer charging negligence and

breaches of implied warranties of merchantability and fitness of

the product for use. The Supreme Court held that a contributory

fault defense was properly submitted to the jury:

As we pointed out in Cintrone, the authorities

in various jurisdictions are in confusion and

seeming conflict on the subject of availability of

the defense of contributory negligence in products

liability cases based on breach of express or implied

warranty of fitness. The various texts and cases

referred to therein reveal that most jurisdictions

bar plaintiff’s recovery where his misuse or abuse

of the product in combination with a defect in the

product, brings about his personal injury, or where

he continued to use the product with knowledge,

actual or constructive, or its defective condition

Id. at 573, 214 A.2d at 19.

The issue before us, whether comparative fault is available

in an express warranty action, was not addressed in either Cintrone

or Maiorino. Neither of those cases clearly involved express

warranties.’’ The last time we were faced with this issue was in

37. The differences between express and implied warranties are significant

jn this context. Implied warranties involve societal standards imposed by law.

(Cont'd)

64a

Appendix A

a case involving the same defendant and, indeed, many of the

same warranties. In Pritchard v. Liggett & Myers Tobacco Co.,

350 F.2d 479, 485 (3d Cir.1965), interpreting Pennsylvania law,

we found that the doctrine of assumption of risk, in its primary

sense, was available as an affirmative defense in an express

warranty claim.

Crucial to our analysis in Pritchard was the distinction

between primary and secondary assumption of risk. In its primary

sense, assumption of risk involves a voluntary exposure to a known

danger, which negates liability. ‘‘Under this concept recovery is

barred because the plaintiff is assumed to have relieved the

defendant of any duty to protect him.’’ /d. at 484. In its secondary

sense, assumption of risk is synonymous with contributory

negligence—a plaintiff is barred from recovery because of her

departure from reasonable standards of care, despite the negligence

of the defendant. Jd.

In Pritchard, we concluded that assumption of risk in the

(Cont'd)

Express warranties involve standards that the seller promises to deliver. If implied

warranties hold sellers responsible for legally imposed duties of care, it only

seems fair that buyers are held responsible to similar legally imposed standards

of due care. Thus, the New Jersey Supreme Court has held that comparative

fault principles should apply in implied warranty cases. However, the legally

enforced obligation to honor express warranties stems from society’s interest

in enforcing promises. See Spring Motors Distributors, Inc. v. Ford Motor Co.,

98 N.J. 555, 579, 489 A.2d 660, 672 (1985). It is not nearly as clear that what

the buyer does should be relevant in determining whether the law will hold the

seller liable for what it has promised. Thus, because Maiorino involved only

implied warranties and Cintrone did not specify whether there was any express

warranty involved, we do not read those cases to stand for the proposition that

comparative fault principles automatically apply in express warranty cases.

65a

Appendix A

sense of contributory negligence is not available in a breach of

warranty action. We then concluded that ‘‘a person who

voluntarily exposes himself to a danger of which he has knowledge,

or has had notice, assumes the attendant risk.’’ /d. at 485. This

reading is in accord with Dean Prosser’s views:

[T]he plaintiff[’s}] ... failure ... to take

precautions against [the] possible existence [of a

product’s danger does] not. . . bar. . . an action

for breach of warranty . . . . But if he discovers

the defect, or knows the danger arising from it,

and proceeds nevertheless deliberately to encounter

it by making use of the product, his conduct is

the kind of contributory negligence which overlaps

assumption of risk; and on either theory his

recovery is barred.

Prosser, The Fall of the Citadel (Strict Liability to the Consumer),

50 Minn.L.Rev. 791, 838-39 (1966).

We reversed the jury verdict for the defendant in Pritchard

because we found that under the more narrow, primary definition

of assumption of risk, the jury could not have concluded that

the plaintiff voluntarily exposed himself to a known danger. We

found that the jury instructions ‘‘were inadequate and confusing

in that they failed to differentiate between the primary and

secondary concepts [of assumption of risk].’’ 350 F.2d at 486.

In reaching that conclusion we noted that ‘‘the defendant’s

advertisements carried factual affirmations, professedly based on

medical research [and that the advertisements] were calculated

to overcome any fears the potential consumers might have had

_as to the harmful effects of cigarettes, and particularly

Chesterfields. Under the circumstances it is difficult to perceive

66a

Appendix A

how the plaintiff, a cabinetmaker with no scientific background,

could have been charged with notice or knowledge of a danger,

which the defendant, with its professed superior knowledge,

extensively advertised did not exist.”’ Jd. Pritchard, however, which

involves Pennsylvania law, does not control this case.

The New Jersey cases, Cintrone and Maiorino, do not speak

to whether a comparative fault defense is available in an express

warranty action. Even Pritchard’s previous interpretation of

Pennsylvania’s express warranty law indicates that comparative

fault is available only to the extent that a plaintiff voluntarily

exposes herself to a danger of which she had specific knowledge.

In order to answer Liggett’s contention that comparative fault

— in the sense of primary assumption of risk — should be available

as a defense to this express warranty claim, we turn to an analysis

of the warranty involved here.

As is discussed in Part VI, in order to make out a prima

facie express warranty claim, Mr. Cipollone must show that

Liggett’s affirmations were part of the basis of the bargain. As

long as the plaintiff can show that Mrs. Cipollone knew of

Liggett’s affirmations of fact, those affirmations are presumed

to be a basis of the bargain unless Liggett can prove that she

did not believe those advertisements. Arthur Godfrey referred to

the fears about smoking as ‘‘applesauce.’’ 5 J.A. 158.°* If Mrs.

Cipollone believed him, she could not have had the subjective

knowledge about the harms of smoking that would permit a jury

38. Defendant has not argued, nor do we believe that they could argue,

that belief in their advertisements was unreasonable.

67a

Appendix A

to conclude that she voluntarily assumed a known risk.*®

In theory, the comparative fault defense is available to Liggett

to the extent that it can prove that after having believed the

advertisements, Mrs. Cipollone learned that they were untrue and

continued to smoke the cigarettes that the advertisements had

caused her to buy. The court must recognize, however, that any

cigarettes that plaintiff bought after she ceased believing in de-

fendant’s affirmations would not, as a matter of law, be cigarettes

smoked in breach of the warranty. The warranty would not exist

as to those cigarettes because Mrs. Cipollone would not have

believed Liggett’s affirmations when she bought them. Thus,

although it would be theoretically possible for the defendants to

win on a comparative fault defense that did not involve misuse

or abuse, as a practical matter it would be almost impossible.

If the jury finds that the cigarettes that Mrs. Cipollone smoked

in breach of the express warranty proximately caused her cancer,

then it is implicitly finding that she believed the advertisements

when she bought those cigarettes.

If she bought some cigarettes while believing in the

advertisements and then learned that the advertisements were false

and smoked those previously purchased cigarettes anyway, then

she would have been assuming a known risk when she smoked

the previously purchased, warranted cigarettes. We conclude that

under such circumstances, she could be barred, by reason of

contributory fault, from recovering on an express warranty claim.

39. Defendants could prevent Mr. Cipollone’s recovery on the express

warranty claim if, despite finding the warranty, the jury finds that the plaintiff

misused or abused the cigarettes. There is no evidence of misuse or abuse in

. this record, however. Plaintiff was using the cigarettes just as Liggett advertised

that she should.

68a

Appendix A

But that would require a jury finding that it was those specific

cigarettes, bought while believing the advertisements but smoked

after she knew that the ads were false, that caused her cancer.

No reasonable jury could find this unless Mrs. Cipollone bought

vast amounts of cigarettes in bulk, and there is no evidence in

the record that she did.

Liggett’s defense is thus more appropriate in the more typical

U.C.C. case. For instance, if a tire purchaser relied on the

affirmations of the seller, then discovered that the seller’s

affirmation was false, and then used the tire anyway, she could

be barred from recovering on an express warranty claim under

an assumption of risk theory. Because the purchaser believed the

affirmations when she purchased the tire, the tire would be

warranted. Still the law would not allow her to collect on that

warranty if she used the tire after she learned that the seller’s

affirmations were false. This scenario is inapplicable in the cigarette

context because the few cigarettes used after learning of a

warranty’s falsity cannot cause the kind of harm that one defective

tire can.

In sum, we find that a comparative fault defense is available

in an express warranty action, but only to the extent that the

defendant can show that the buyer misused or abused the product

or used the product after learning that the warranty was false.

We do not think that that would be possible in this case. There

is no evidence that Mrs. Cipollone misused cigarettes. To the extent

that she knew cigarettes were bad for her and hence did not believe

Liggett’s advertisments to the contrary, she cannot collect on an

express warranty theory, but not because she assumed the risk

of the cigarettes. If she did not believe the advertisements, then

they could not have formed a basis of the bargain in the first

69a

Appendix A

place, and the jury could not find an express warranty. *°

B.

The same rationale that overcomes Liggett’s comparative fault

defense overcomes Liggett’s contention that Mrs. Cipollone’s

knowledge of the advertisements’ falsity breaks the chain of

causation linking Liggett’s breach to Mrs. Cipollone’s injury.

Liggett contends that the district court erred in failing to instruct

the jury that if a buyer uses a product with knowledge of its

warranty-breaching defect, any personal injuries arising from that

use did not proximately result from the breach of warranty.

Arguably, section 2-715 of the U.C.C., which provides that

‘*[c]onsequential damages resulting from the seller’s breach include

. . . Injury to person . . . proximately resulting from any breach

of warranty,’’ required such an instruction. See N.J.S.A.

§ 12A:2-715.*'

40. As an alternative basis for declining to grant Liggett’s motion for a

new trial or judgment n.o.v. on this issue, the district court held that Liggett

had failed to object to the jury charge on the issue of contributory fault with

respect to the express warranty claim and had therefore waived it pursuant to

Fed.R.Civ.P. 51. Although this issue is now no longer relevant, both because

there will be a new trial and because of our finding that comparative fault could

not be applicable in this case unless Liggett can prove abuse or misuse, we are

satisfied that Liggett did adequately object to the district court’s ruling on this

issue. See Defendant’s Objections

41. In its opinion denying Liggett judgment n.o.v., the district court held

that Liggett had waived this point by failing to object to jury instructions at

trial. See Fed.R.Civ.P. 51. As in the district courts waiver detemination in the

comparative fault context, the waiver issue is no longer relevant because there

will be a new trial. Nonetheless, given the complexity of the case, and the potential

importance of this issue on retrial, we think it important to give the district

* court the benefit of our views on this aspect of the matter.

70a

Appendix A

Liggett relies on U.C.C. Official Comment 5 to section 2-715

(‘‘{I]f [the injured person] discover{ed] the defect prior to his

use, the injury would not approximately result from the breach

of warranty.’’) and New Jersey Study Comment | to section

12A:2-715 (‘‘[I]f the buyer’s own fault or negligence contributes

to the injury (e.g., by using the goods with knowledge of their

defects), he cannot recover consequential damages, because such

damages are not proximately due to the breach of warranty.’’).

Both of these comments imply that the buyer’s knowledge of a

defect breaks the chain of proximate causation because, in effect,

the plaintiff’s behavior is an intervening cause. The seller could

not reasonably foresee that a buyer would use a product once

that buyer learned that the product was defective.

Like the comparative fault defense, however, the knowledge-

as-intervening-cause argument applies in the kind of case

represented in the tire hypothetical outlined above, not the cigarette

sales at issue in this case. If a buyer uses a tire after having

discovered a warranty-breaching condition that makes use of that

tire unreasonable, then she cannot collect consequential damages

under the warranty. In the instant case, however, once the plaintiff

discovered that Liggett’s advertisements were false, the cigarettes

she purchased after that time must, as a matter of law, have been

unwarranted, and therefore would not be considered by a jury

asked to determine whether the cigarettes she smoked that were

in breach of Liggett’s warranty proximately caused her lung cancer.

Thus, both the comparative fault and the causal chain

arguments fail to defeat the express warranty claim because both

contentions depend on Liggett’s proving that Mrs. Cipollone knew

that the advertisements were false. But the basis of the bargain

provision in N.J.S.A. § 12A:2-313 requires that the buyer believe

the advertisements. If Liggett proves that she did not believe their

Tla

Appendix A

advertisements, then there is no warranty in the first place. In

other kinds of cases, subsequently acquired knowledge and use

may constitute either comparative fault or an intervening cause

sufficient to bar recovery, but in those cases there is sufficient

time for the plaintiff to buy the product while believing in the

warranty, subsequently learn of the warranty’s falsity, and proceed

to use the product nonetheless. If that subsequent use results in

serious damage, the buyer cannot recover. No serious damage

could result from a comparable kind of ‘‘subsequent use’”’ in this

case because Mrs. Cipollone could not have been seriously hurt

from cigarettes bought while believing in the advertisements but

smokes after learning of the advertisements’ falsity.

Liggett must be given the opportunity at the outset to prove

that at some point prior to January |, 1966, Mrs. Cipollone ceased

to believe, or never believed, Liggett’s advertisements. If the jury

finds such disbelief, they must be instructed to find that the

advertisements could not have formed the basis of the bargain

for cigarettes she purchased after that date. As to cigarettes

purchased and smoked before that date, however, for which the

advertisements would constitute a basis of the bargain, Liggett

should not be given another opportunity to prove what they failed

to prove in the first instance, i.e. that Mrs. Cipollone did not

believe the advertisements.

VIII. WAS THERE SUFFICIENT EVIDENCE TO SUPPORT

©. JURY FINDING THAT MRS. CIPOLLONE’S INJURY

WAS CAUSED BY LIGGETT’S BREACH OF EXPRESS

WARRANTY?

Liggett contends that it is entitled to judgment n.o.v. on the

express warranty claim because the record contains insufficient

' evidence to support a jury verdict for Mr. Cipollone on this point.

72a

Appendix A

t, we note that the express warranty provision of the

teense Code, section 2-313, makes clear that no

formality or magic words are required to create an express

warranty. “‘It is not necessary to the creation “ an exgoms

warranty that the seller use formal words such as ‘warrant ~

‘guarantee’ or that he have a specific intention to make a warran ,

_.. ** NJLS.A. § 12A:2-313(2) (1970). The seller may be ~oe

if its representation regarding the goods takes ‘the form Pi

newspaper, magazine, radio or sce , She “

ollins v. Uniroyal, Inc., 126 N.J.Super. , 405, : ,

— (App.Div. 1973) (per curiam), aff'd, 64 N.J roa ma _—

16 (1974) (per curiam); Drayton v. Jiffee Chemical orp.,

F.2d 352, 358 (6th Cir.1978); J. White & R. Summers, ge

Commercial Code 335-36 (2d ed. 1980). Consequently,

Cipollone was free to rely, as he did, on advertisements to pro

the existence and scope of Liggett’s warranty.“

A.

Liggett contends that the record contains insufficient evidence

think that there is sufficient evidence of both (1) the existeuce of a warranty

that cigarettes were safe and (2) breach of that warranty.

73a

Appendix A

to support a finding that Liggett breached any warranty in the

instant case. More specifically, Liggett maintains that there is

insufficient evidence ‘‘to support a finding that Liggett made any

express warranty warranting against serious health effects in the

future from long term cigarette use.”’ Liggett Br. at 34-35.

Although the question whether a particular set of representations

made by the seller amounts to an express warranty is normally

one of fact, and consequently for the jury to decide, see Gladden

v. Cadillac Motor Car Division, 83 N.J. 320, 325, 416 A.2d 394,

396 (1980), a judgment n.o.v. may be granted under Fed.R.Civ.P.

50(b) if the record is *‘ ‘ ‘‘critically deficient of that minimum

quantity of evidence from which a jury might reasonably afford

relief.’’ ’ ’’ Powell v. J.T. Posey Co., 766 F.2d 131, 133-34 (3d

Cir.1985) (citations omitted). This question is one of law, over

which our review is plenary. See id. at 134.

Many Chesterfield and L & M advertisements were submitted

to the jury. Liggett contends that ‘‘{nJone of them could constitute

to a reasonable person a warranty covering serious health effects

in the future from long term use of cigarettes.’’ Liggett’s Br. at

35. We disagree.

One Chesterfield advertisement stated, without qualification,

that *“‘NOSE, THROAT, and Accessory Organs [are] not

Adversely Affected by Smoking Chesterfields.”’ See supra at 548.

The advertisement discussed a ““study by a competent medical

specialist and his staff on the effects of smoking Chesterfield

cigarettes’’ on a study group that included ‘‘men and women”’

who had ‘“‘continually’’ smoked ‘‘10 to 40”’ Cigarettes per day

for “one to thirty years.’” Members of the study group were ‘‘given

a thorough examination, including X-ray pictures’’ at ‘‘the

- beginning and at the end of”’ a “‘six-month{ ] period.” According

to the advertisement, ‘‘[t]he medical specialist, after a thorough

74a

Appendix A

examination of every member of the group,’’ concluded that “‘the

ears, nose, throat and accessory organs of all participating subjects

examined . . . were not adversely affected in the six-month period

by smoking the cigarettes provided.”’

In a radio commercial, Arthur Godfrey related the story of

another of these ‘‘six-month[ ] period’’ studies involving thirty-

year chain smokers and stated that the study was “proof” of

the proposition that Chesterfield cigarettes “‘never . - did you

any harm.”’ See supra at 549. Mr. Godfrey also told his listeners

that he could not remember ever seeing a “‘gravestone’’ stating

that the buried individual had ‘‘{[s}moked [t]oo [m]uch.” See supra

note 2. One magazine advertisement declared in a bold typescript

that the consumer should “‘PLAY SAFE”’ and “Smoke

Chesterfield.” See supra at 548. A series of television and magazine

advertisements for the L & M brand stated that the cigarettes

were “‘just what the doctor ordered.’’ See supra at 550.

We hold that a reasonable jury could conclude from these

advertisements, and the many others entered into evidence, that

Liggett had represented to the consumer that the long-term

smoking of Chesterfield and L & M cigarettes would not endanger

the consumer’s health, and that these warranties were untrue.

Liggett cannot be granted judgment n.o.v. on the ground that

the advertisements represented only that short-term smoking was

safe. A reasonable jury could infer that an unqualified

representation that smoking is safe creates a warranty that smoking

for a long period of time is safe.

Furthermore, several of the purported ‘‘studies’’ conducted

by ‘‘medical specialists’’ from a ‘‘responsible consulting

organization”’ involved smokers who, the advertisements took care

to note, smoked heavily for up to thirty years. A reasonable jury

75a

Appendix A

could interpret the inclusion of persons who had smoked heavily

for thirty years in the studies as representing that smoking for

a long period of time was safe. “‘{B]road general assertions of

quality, and particularly those of safety, as for example that...

cigarettes are . . . ‘harmless’ or ‘safe to smoke,’ may readily be

found by the jury to include a representation that there is nothing

to make the product unsafe.’’ W. Prosser, Handbook of the Law

of Torts 653 (4th ed. 1971). Indeed, the last time we reviewed

the Liggett advertisements at issue in this case, we concluded that

**[t}he evidence compelling points to an express warranty, for the

defendant, by means of various advertising media, not only

repeatedly assured [the consumer] that smoking Chesterfields was

absolutely harmless, but in addition the jury could very well have

concluded that there were express assurances of no harmful effect

on the lungs.’’ Pritchard v. Liggett & Myers Tobacco Co., 295

F.2d 292, 296 (3d Cir.1961). The district court did not err in

refusing to grant judgment n.o.v. on the ground that Mr. Cipollone

failed to introduce sufficient evidence to uphold the jury verdict

with respect to the scope of Liggett’s express warranty.

Neither do we find, as Liggett contends, that there was

insufficient evidence to prove that Mrs. Cipollone’s smoking

caused her cancer. In its opinion denying Liggett’s motion for

a judgment n.o.v., the district court concluded that Liggett’s ‘‘no

adverse effects’’ Chesterfield advertisements began to run in 1952,

see 693 F.Supp. at 214 & n. 8, a conclusion supported by the

evidence discussed above and which the plaintiff has not challenged

in its brief. The evidence also supports the conclusion that the

L & M “‘just what the doctor ordered’’ advertisements began

_before Mrs. Cipollone switched to that brand in 1955. Hence the

jury could have found that Mrs. Cipollone smoked cigarettes that

76a

Appendix A

were in breach of warranty from 1952 until as late as 1966 (the

date at which the express warranty claim is cut off by our

interlocutory preemption decision).

The jury found that Mrs. Cipollone’s smoking of cigarettes

that were in breach of the warranty proximately caused her lung

cancer and death. See Special Verdict Question 15 (quoted supra

at 554). Liggett contends that the record does not contain sufficient

evidence to support this finding and that the district mn

ly erred in declining to grant judgment n.o.v. on

an peed a great deal of evidence was introduced that Mrs.

Cipollone’s cancer was caused by her 40 years of smoking, Liggett

contends that there is no evidence that demonstrates that her cancer

was caused by smoking from the years 1952 to 1966. We disagree.

As previously noted a judgment n.o.v. may be granted only if

the record is ‘* ‘ ‘‘critically deficient of that minimum quantity

of evidence from which a jury might reasonably afford relief.

Powell, 766 F.2d at 133-34 (citations omitted).

The statistical correlation between heavy smoking and lung

cancer is well-documented.*? The plaintiff presented expert

43. In 1984, Congress mandated rotating warnings on cigarette packages,

one of these warnings states “‘“SURGEON GENERAL'S WARNING: —e sa

CAUSES LUNG CANCER .... " 15 U.S.C. § 133Hax(1) (Supp. .

The Surgeon General has concluded that “the case for cigarette a as

the principal cause of lung cancer is overwhelming.” U.S. ee —

Serv., The Health Consequences of Smoking: Nicotine Addiction— ) —

of the Surgeon General \\ (1988) (quoting US. Public Health 1 ten — -

Health Consequences of Smoking: A Public Service Review— . ed.

1968)). See also U.S. Dep’t Health & Human Serv., The Health Commquases

of Smoking: Cancer—A Report of the Surgeon General (1982, US. ang ee

& Human Serv., The Health Consequences of Smoking for Women: A Report

980); U.S. Dep’t Health, Educ. & Welfare, Smoking

of the Surgeon General (1980) Pt

77a

Appendix A

testimony from qualified witnesses that smokers are much more

likely to contract lung cancer than non-smokers, especially non-

smokers such as Mrs. Cipollone, for whom there is no evidence

of exposure to any cancer causing agent other than Cigarette smoke.

In addition, these experts testified that Mrs. Cipollone’s early years

of smoking contributed more — on a year-to-year basis — than

her later years of smoking because the lung injury produced from

smoking early on is an injury that has many more years of potential

to develop cancer than the injury incurred later in life.

The district court instructed the jury that it could find

proximate cause in a case in which ‘‘{t]here may be two or more

concurrent and directly cooperative and efficient proximate causes

of an injury’’ if the defendant was ‘‘a substantial contributing

factor in [causing the plaintiff’s] injuries.”” As we have explained,

these instructions were correct. Under these instructions, the jury

could have reasonably concluded from the foregoing evidence that

Mrs. Cipollone’s smoking from 1952 to 1966 proximately caused

her lung cancer. Her smoking from 1952 to 1966 could clearly

have been found to be ‘‘a substantial contributing factor’’ in the

development of her lung cancer. Liggett has not challenged the

jury instructions’ definition of proximate cause on appeal with

respect to the express warranty claim.

Mr. Cipollone presented sufficient evidence concerning the

causal link between Mrs. Cipollone’s lung cancer and her smoking

between 1952 and 1966 that a grant of judgment n.o.v. on this

issue under Fed.R.Civ.P. 50(b) would not have been appropriate.

(Cont'd)

and Health: A Report of the Surgeon General (1979); U.S. Dep’t Health, Educ.

-& Welfare, Smoking and Health: Report of the Advisory Committee to the

Surgeon General of the Public Health Service (1964).

78a

Appendix A

IX. THE RISK-UTILITY CLAIM

The District Court ruled that the ape Jersey pit

Liability Act, N.J.S.A. § 2A:58C (hereafter ; = Act ) te =

in this case to bar plaintiff’s risk-utility claim. Section ee

of the Act provides that if the plaintiff asserts a nan nar

claim against a manufacturer, the manufacturer shall not

if:

The characteristics of the product are known to

the ordinary consumer or user, and the harm was

caused by an unsafe aspect of the product that

is an inherent characteristic of the product and that

would be recognized by the ordinary person who

uses or consumes the product with the ordinary

knowledge common to the class of persons for

whom the product is intended... .

To the extent that the Act imposed new rules with —

to the imposition of liability, it purported only to mgd to = .

filed after the date of its enactment. Section 8 of the Act p —

that the act ‘‘shall take effect immediately except that = =

of this act that establish new rules with respect to burden a p :

or the imposition of liability in product liability actions ~ —

only to product liability actions filed on or after t de a

enactment.”’ In its October 27, 1987, opinion, — —

court found that, based on the New Jersey Assem b é st “me

Committee’s report, the New Jersey legislature inten a

3(a)(2) to be a codification of existing common law seat ~e

that the legislature intended that section to be applied retr ,

44. The risk-utility claim alleged that the risk of cigarettes — their

social utility. See Plaintiff's Third Amended Complaint, | J.A. 39, 42.

ie

79a

Appendix A

Although the district court disagreed with the legislature on the

question whether section 3(a)2) was a codification of existing

law, the court nonetheless held that section 3(a)(2) applied to the

Cipollone case, even though it was filed before the Act became

law, because the legislature’s belief that it was not a new rule

reflected an intent that the rule be applied retroactively.

The applicability of section 3(a)(2) to claims like this is

currently before the New Jersey Supreme Court in another tobacco

case, Dewey v. Brown & Williamson Tobacco Corp., 225

N.J.Super. 375, 542 A.2d 919 (App.Div.), certif. granted, 113

N.J. 379, 550 A.2d 481 (1988). We think it highly unlikely that

the issue will not be resolved definitively by the time the instant

case is re-tried. Therefore, we will not dwell at length on the issue.

We do not believe that section 3(a)(2) was a codification of

existing common law, although it may have been a clarification

of New Jersey law. See N.J.S.A. 2A:58C-1, Senate Judiciary

Committee Statement at 464-65 (‘‘These sections [2-4] are intended

to establish clear rules with respect to specific matters as to which

the decisions of the courts in New Jersey have created

uncertainty.’’). See also Whitehead v. St. Joe Lead Co., 729 F.2d

238 (3d Cir.1984) (the levels at which lead exposure becomes

dangerous are not generally known, but general public knowledge

of danger is relevant to the risk-utility injury); O’Brien v. Muskin

Corp., 94 N.J. 169, 463 A.2d 298 (1983) (generalized knowledge

of above ground swimming pools did not prevent a risk-utility

claim from going to the jury).

As a clarification, the provision was meant to be applied

retroactively, because section 8’s ‘“prospective only’’ provision

applies only to new rules. Nonetheless, we cannot affirm the district

Court’s decision to deny, as a matter of law, plaintiff’s generic

80a

Appendix A

risk-utility claim because, applying the language of the Act, we

cannot find, and we do not think that there was sufficient evidence

for the district court to find, that the ‘‘inherent{ly] [dangerous]

characteristic{s]’’ of cigarettes were known to the ‘ordinary

consumer or user,’ prior to 1966. This is an issue of fact for

the jury.*°

Our view is in accord with what the Appellate Division of

the Superior Court held in Dewey. That court wrote: “*Iwje have

no quarrel with defendant’s proposition that plaintiff may not

recover if a factfinder concludes that the death of her decedent

was caused in large measure from exposure to the danger inherent

in all cigarettes, a danger acknowledged to be within his

contemplation as an ordinary consumer.’’ 275 N.J .Super. at 386,

542 A.2d at 925 (emphasis added). No such ordinary consumer

knowledge has been acknowledged in this case, and it is up to

the jury to determine what the ordinary consumer knew. Therefore

we will remand on this issue, and, if the New Jersey Supreme

Court has not written expansively enough to dispose of this issue

before the case is retried, the plaintiff should be allowed to proceed

on his generic risk-utility claim.“

45. The district court (in an unpublished opinion of October 27, 1987)

apparently relied on comment i to Section 402A of the Restatement (Second)

of Torts, which the drafters of the Product Liability Act meant to incorporate.

See N.J.S.A. 2A:58C-1, Senate Judiciary Committee Statement at 465. Comment

i says that ‘{glood tobacco is not unreasonably dangerous merely because the

effects of smoking may be harmful.”’ As the Appellate Division of the Superior

Court did in Dewey, $42 A.2d at 925, we reject the applicability of comment

i in this situation. The fact that the New Jersey legislature endorsed comment

i in 1987 does not mean that the ordinary consumer must have known about

the harms of smoking in, for example, 1958.

46. The district court granted a directed verdict for the defendants on the

(Cont'd)

8la

Appendix A

X%. PREJUDGMENT INTEREST

| The district court denied plaintiff’s request for prejudgment

interest because the jury awarded the plaintiff contract, not tort

damages. New Jersey Court Rule 4:42-11(b) reads as follows:

(b) Tort Actions. Except where provided by statute

. the court Shall, in tort actions, including

products liability actions, include in the judgment

simple interest ....

The district court declined to follow Collins v. Uniroyal, Inc. 130

N.J.Super. 169, 325 A.2d 854 (Law Div.1974), in which the New

Jersey Superior Court awarded prejudgment interest on an express

warranty claim, because the court found that Collins was ‘contrary

to the plain language of the provision.” 696 F Supp. 208, 221.

The district court also found that there was no equitable basis

for awarding prejudgment interest and that one of the purposes

behind such an award, complete compensation of the plaintiff

would not be furthered because, theoretically, part of Mr.

Cipollone’s recovery on the express warranty claim was for loss

of future services from his wife. Jd. at 222.

Of course, the availability of prejudgment interest may be

mooted on retrial because a new jury may not grant an award

(Cont'd)

plaintiff's alternative design claim. See 683 F.Supp. 1487, 1493-95 (D.N.J.1988).

This decision has not been appealed and thus the plaintiff will not be free to

advance this claim again. However, we note that because the Federal Labeling

Act, which formed the basis of our preemption decision, does not preempt design

‘defect claims, plaintiff may (as of this writing) proceed against co-defendants

Philip Morris and Lorillard, as well as Liggett, on the risk-utility claim.

82a

Appendix A

on the basis of breach of express warranty.‘’ If the new jury does

grant such an award, however, we believe that the plaintiff should

be entitled to some prejudgment interest. Unlike the district court,

we do not find that the holding and logic of Collins is contrary

to the plain language of the rule.

As the court in Collins pointed out, the language of the rule

(‘‘in tort actions, including products liability actions’’) indicates

that the drafters wanted to include actions in addition to just those

sounding in tort. Otherwise, the inclusion of the **products

liability’ language would be superfluous. Collins, 130 N.J ‘Super.

at 172-73, 325 A.2d at 855. This is, of course, a products liability

case. The court in Collins also emphasized that the policy

underlying the rule is to inhibit delay and encourage settlement.

130 N.J.Super. at 173, 325 A.2d at 856. These policy concerns

seem particularly applicable in the case at bar, which has already

been the source of seven district court opinions, four of them

published, and three published opinions by this court.

Furthermore, Collins, a fifteen year old decision, has not been

significantly questioned or challenged. We think it appropriate

to defer to the New Jersey court’s interpretation of the New Jersey

Rule and therefore conclude that the district court erred to the

extent that it held that prejudgment interest is never available

on an express warranty products liability claim.

Neither do we believe that the New Jersey prejudgment

interest is wholly inapplicable to future compensation awards.

Rule 4:42-11(b) states that prejudgment interest is appropriate

except in ‘exceptional cases.” The district court reasoned that

prejudgment interest was inappropriate, in part, because Mr.

47. It is not disputed that if there is a failure to warn award, prejudgment

interest will be appropriate.

83a

Appendix A

Cipollone’s award was based on loss of future services.

Nonetheless, the New Jersey Supreme Court, albeit in dictum,

has said: ‘‘[t}he applicability of a compensation rationale for

prejudgment interest may be questionable in the case of future

losses, since it can be argued that those damages accrue after the

judgment. However, the public interest in encouraging settlements

is an adequate independent basis for the application of the

prejudgment interest rule in this case.”’ Ruff v. Weintraub, 105

N.J. 233, 245, 519 A.2d 1384, 1391 (1987). In light of the

protracted nature of this litigation, we believe that the New Jersey

Supreme Court would opt to follow their prescriptions in Ruff.

See also Salas by Salas v. Wang, 846 F.2d 897, 908-10 (3d

Cir.1988). Thus, in the absence of further guidance from the New

Jersey courts on the point, which we would welcome, we do not

believe that the post-judgment compensation element of an award

_in this case constitutes an ‘‘exceptional”’ circumstance that should

“suspend the running of ... prejudgment interest.’’ Rule

4:42-11(b).

XI. DID THE DISTRICT COURT ERR IN GRANTING

PARTIAL SUMMARY JUDGMENT FOR MR.

CIPOLLONE WITH RESPECT TO THE DEFENDANTS’

STATUTE OF LIMITATIONS DEFENSE?

New Jersey has a two year statute of limitations for personal

injury actions, see N.J.S.A. § 2A:14-2, and has adopted the

discovery rule. Under this doctrine, a cause of action will be held

not to accrue until the injured party ‘‘ ‘learns, or reasonably should

learn, the existence of that state of facts which may equate in

law with a cause of action.’ ’’ Vispisiano v. Ashland Chemical

Co., 107-N.J. 416, 426, 527 A.2d 66, 71 (1987) (per curiam)

(citation omitted) (emphasis in original). Stated differently, a cause

of action will be held not to accrue until the injured party

84a

Appendix A

‘** ‘discovers, or by the exercise of reasonable diligence and

intelligence should have discovered[,] that he may have a basis

for an actionable claim.’ ’’ Jd. at 419, 527 A.2d at 67 (citation

omitted).

Mrs. Cipollone’s lawsuit was filed on August 1, 1983. The

district court granted (partial) summary judgment against the

defendants on their statute of limitations defense, holding that

no reasonable jury could conclude that Mrs. Cipollone discovered,

or by the exercise of reasonable diligence should have discovered,

the facts giving rise to her claims prior to August 1, 1981. Liggett

contends that the evidence in the record was sufficient to support

a jury finding that Mrs. Cipollone discovered or should have

discovered the facts giving rise to her claim before August 1, 1981.

Summary judgment should be granted if the pleadings,

depositions, answers to interrogatories, and admissions on file,

together with the affidavits, if any, show that there is no genuine

issue of material fact. Our review is de novo. See Celotex Corp.

v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

The relevant facts are as follows. Mrs. Cipollone went to

Dr. Alfred Lowy on July 23, 1981 for her regular medical checkup

and x-ray. At that time, Dr. Lowy told her that he had discovered

a spot on her lung. Mrs. Cipollone believed that this spot could

be cancer caused by her smoking. She testified:

Q: When Dr. Lowy told you you had a spot on

your lung, you got scared? A: Yes.

Q: You got scared because you knew what the

significance of that could be, didn’t you? A: Yes.

85a

Appendix A

Q: You were afraid that it could mean lung

cancer? A: That’s right.

Q: You knew that cigarette smoking had been

connected with cancer as you told us? A: Yes.

Q: So you were afraid right then and there that

you could have lung cancer from cigarette

smoking, isn’t that a fact? A: Right.

There is also ample evidence in the record from which the jury

could conclude that Mrs. Cipollone knew that lung cancer was

often caused by smoking.

Dr. Lowy did not tell Mrs. Cipollone that she might have

lung cancer, but advised Mrs. Cipollone to see a lung specialist

immediately. He recommended Dr. Seriff, whom Mrs Cipollone

went to see the next day. Dr. Seriff inquired about Mrs. Cipollone’s

smoking history and advised her, as he advises all of his patients,

"to stop smoking. Although Dr. Seriff formulated five differential

diagnoses of her condition, one of which was primary lung

cancer,** ‘‘[bjased on the appearance of Mrs. Cipollone’s x-rays,

48. Dr. Seriff’s affidavit states that ‘‘{m]y impression [on July 24, 1981]

included the following possibilities:

A. Resolving pneumonia;

B. Primary lung cancer;

C. Dog parasite (difillaria immitus)—giving a round area

of inflammation;

D. Carcinoid of the lung;

E. Metastic lung tumor—unlikely.’’

86a

Appendix A

[he] initially believed she had a pneumonia or viral infection and

treated her with antibiotic medications.’’ Dr. Seriff did not tell

her that there was a possibility that she had lung cancer, but upon

leaving Dr. Seriff’s office, Mrs. Cipollone quit smoking for the

first time in twenty-four years.

Dr. Seriff saw Mrs. Cipollone for the second time on July

30, 1981. He later affirmed that ‘‘[t}here was no definite change

in her x-ray as a result of the antibiotic medication, therefore

I began to feel it was less likely that she had a slowly resolving

pneumonia causing the shadow.”’ He still did not inform her that

she might have cancer; he told her that his ‘“‘impression’’ was

that she had a viral infection.

At this point, Mrs. Cipollone certainly did not know that

she had lung cancer. However, by this time, she knew that she

had a spot on her lung and believed that the spot could be cancer

caused by smoking. Indeed, she must have feared that she might

get lung cancer from smoking, having made repeated novenas

to St. Jude over the years in the hopes of avoiding it. She could

have asked Dr. Seriff whether she might have cancer. Thus,

although we think that the question is close, we conclude that

a reasonable jury could find that Mrs. Cipollone ** ‘by the exercise

of reasonable diligence and intelligence should have discovered’ ”’

that she ‘‘ ‘may have [had] a basis for an actionable claim’ ”’

prior to July 30, 1981.** Vispisiano, 107 N.J. at 419, 527

49. If July 30, 1981, the date of Mrs. Cipollone’s second visit to Dr. Seriff,

was the first day on which she should have known that she might have lung

cancer, her suit was timely filed because July 30, 1983 was a Saturday. Under

New Jersey law, the limitations period extends to the first day on which legal

business can be transacted, which was August |, 1983, the day she filed her suit.

87a

Appendix A

A.2d at 67.°°

Mr. Cipollone argues, in essence, that if Dr. Seriff did not

know with reasonable medical certainty by August 1, 1981 that

Mrs. Cipollone had lung cancer from smoking, then it would be

unreasonable to expect Mrs. Cipollone to know this information.

The problem with this argument is that it misstates the applicable

legal test. The statute of limitations did not start running when

Mrs. Cipollone knew that she had cancer from smoking; it started

to run when she, by exercising reasonable diligence, should have

known that she might have had cancer from smoking. Accordingly

the issue will have to be tried.

We do not, of course, hold that Mr. Cipollone’s claims are

barred by the two year statute of limitations. We hold only that

a jury could conclude that they are and that summary judgment

was therefore inappropriate on this issue.

50. The Vispisiano case provides the legal standard by which we judge this

issue, but we do not find the facts or the language of that case particularly

helpful. The touchstone of Vispisiano is that the causal connection between

toxic chemicals in the marketplace and cancer is not generally known. This is

not so with smoking and cancer. Second, the language of Vispisiano can be

used to argue either side of this case. Although Vispisiano found that medical

confirmation was not necessary to start the statute running, 107 N.J. at 437,

527 A.2d at 77, the court also held that the statute could not start running

until a plaintiff had ‘‘reasonable medical information’’ on which to base her

belief that she might have a claim, id. at 435, $27 A.2d at 76. As of July 30,

1981, Mrs. Cipollone’s knowledge that she might have lung cancer was based

solely on her own suspicions after one visit to her general practitioner and one

visit to a lung specialist who toid her that she had a viral infection. However,

taking into account the procedural posture of Vispisiano (a reversal of summary

judgment for the defendants), we read that case’s ambiguous language to mean

_that these fact bound inquiries should be left to the jury.

88a

Appendix A

XII. DID THE DISTRICT COURT ERR IN HOLDING THAT

FEDERAL LAW PREEMPTED PLAINTIFF’S

INTENTIONAL TORT CLAIMS?

Mr. Cipollone contends that the district court misconstrued

our decision on the preemptive effect of the Federal Cigarette

Labeling and Advertising Act (‘Labeling Act’’) by holding that

it preempts post-1965 intentional tort claims.’' As amended, the

Labeling Act states:

It is ... the purpose of this chapter ... to

establish a comprehensive Federal program to deal

with cigarette labeling and advertising with respect

to any relationship between smoking and health,

whereby—

(1) the public may be adequately informed

about any adverse health effects of cigarette

smoking by inclusion of warning notices on each

package of cigarettes and in each advertisement

of cigarettes; and

(2) commerce and the national economy may

be (A) protected to the maximum extent consistent

with this declared policy and (B) not impeded by

diverse, nonuniform, and confusing cigarette

labeling and advertising regulations with respect

to any relationship between smoking and health.

1S U.S.C. § 1331 (1982 & Supp. II 1984).

51. Mr. Cipollone also contends that our preemption decision was erroneous

in order to preserve this issue for later review. The prior decision of this court

is binding on this panel. See IOP Chapter 8C.

89a

Appendix A

In our preemption decision, we applied the doctrine of implied

preemption and held that in light of section 1331's declaration

of Congressional purpose

the Act preempts . . . state law damage actions

relating to smoking and health that challenge either

the adequacy of the warning on cigarette packages

or the propriety of a party’s actions with respect

to the advertising and promotion of cigarettes. . . .

[W]here the success of a state law damage claim

necessarily depends on the assertion that a party

bore the duty to provide a warning to consumers —

in addition to the warning Congress has required

on cigarette packages, such claims are preempted

as conflicting with the Act.

789 F.2d at 187.

On remand, the district court interpreted our preemption

decision as barring the plaintiff’s failure to warn, fraudulent

misrepresentation, express warranty, and conspiracy to defraud

c

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