Petition for Writ of Certiorari — R.J. Reynolds Tobacco Co. v. Engle (No. 06-1545)

Supreme Court, U.S.

rice Dv

061545 MAY 21 2007

No. 06-___

aaa ee a a RT Gee STENT Tae

Jn the Supreme Court of the Gnited States

R.J. REYNOLDS TOBACCO Co., ef al.,

Petitioners,

¥.

HOWARD A. ENGLE, ef al.,

Respondents.

On Petition for a Writ of Certiorari to the

Supreme Court of Florida

PETITION FOR A WRIT OF CERTIORARI

KENNETH S. GELLER ANDREW L. FREY

Mayer, Brown, Rowe & Maw Counsel of Record

Lie ANDREW H. SCHAPIRO

1909 K St., N.W. BRIAN M. WILLEN

Washington, D.C. 20006 Mayer, Brown, Rowe & Maw

(202) 263-3000 LLP

1675 Broadway

THEODORE B. OLSON New York, NY 10019

MARK A. PERRY (212) 506-2500

AMIR C. TAYRANI

Gibson, Dunn & Crutcher

LLP

1050 Connecticut Ave., N.W.

Washington, D.C. 20036

(202) 955-8500

Counsel for Petitioner Philip Morris USA Inc.

(Additional counsel listed on inside cover)

eaten estrone SHRM A RLM REA renin ar NNN RR ATR RANE NS

WILSON-EPES PRINTING CO., INC. — (202) 789-0096 — WASHINGTON, D.C. 20002

STUART ALTSCHULER

Winston & Strawn LLP

35 W. Wacker Drive

Chicago, IL 6060!

(312) 558-5600

JOSEPH PATRICK ARCHIE

Dechert LLP

2929 Arch Street

Philadelphia, PA 19104

(215) 994 4000

DAVID S. EGGERT

Arnold & Porter LLP

555 Twelfth Street, N.W.

Washington, DC 20004

(202) 942-5000

Counsel for Petitioner Philip

Morris USA Inc.

DAVID L. Ross

ELLIOT H. SCHERKER

Greenberg Traurig

1221 Brickell Ave.

Miami, FL 33131

(305) 579-0500

Counsel for Petitioner

Lorillard Tobacco Co.

DONALD B. AYER

Jones Day

51 Louisiana Ave., N.W.

Washington, D.C. 20001

(202) 879-3939

CHARLES R.A. MORSE

Jones Day

222 E. 41st Street

New York, NY 10017

(212) 326-7847

Counsel for Petitioner R.J.

Reynolds Tobacco Co.

AARON H. MARKS

LEONARD A. FEIWUS

Kasowitz Benson Torres &

Friedman

1633 Broadway, 22nd Floor

New York, NY 10019

(212) 506-1700

KELLY ANNE LUTHER

Clark Silverglate &

Campbell, P.A.

799 Brickell Plaza, Suite 900

Miami, FL 33131

(305) 377-0700

Counsel for Petitioner Liggett

Group LLC

RICHARD A. SCHNEIDER JAMES A. GOOLD

King & Spalding LLP Covington & Burling LLP

1180 Peachtree Street, N.E. 1201 Pennsylvania Ave., N.W.

Atlanta, GA 30309 Washington, D.C. 20044

(404) 572-4600 (202) 662-6000

Counsel for Petitioner Brown Counsel for Petitioner The

& Williamson Holdings, Inc. Tobacco Institute, Inc.

i

QUESTIONS PRESENTED

1. Whether the Due Process Clause prohibits a state

court from giving preclusive effect to a jury verdict when it is

impossible to discern which of numerous alternative grounds

formed the basis for the jury’s findings of wrongful conduct.

2. Whether, merely by invoking characterizations such

as “fraud” or “negligence,” a plaintiff may evade federal pre-

emption under this Court’s ruling in Cipollone v. Liggett

Group, Inc., 505 U.S. 504 (1992), which holds that the Fed-

eral Cigarette Labeling and Advertising Act preempts state-

law liability based, inter alia, on allegations that cigarette

manufacturers failed to warn about the dangers of smoking or

marketed cigarettes in ways that “neutralized” the federally

mandated warnings.

li

RULE 14.1(b) AND 29.6 STATEMENT

. Petitioner Philip Morris USA Inc. is a wholly owned

subsidiary of Altria Group, Inc. Altria Group, Inc. is the only

publicly held company that owns 10% or more of Philip

Morris USA Inc.’s stock. Altria Group, Inc. is a publicly

held company. No publicly held company owns 10% or

more of Altria Group, Inc.’s stock.

Petitioner Brown & Williamson Holdings, Inc. is an in-

direct, wholly owned subsidiary of British American To-

bacco, p.I.c., a publicly traded corporation. Before August 2,

2004, Petitioner was known as Brown & Williamson To-

bacco Corporation. On July 30, 2004, a transaction was

completed whereby Petitioner R.J. Reynolds Tobacco Com-

pany became the successor in interest to Brown & William-

son Tobacco Corporation’s U.S. tobacco business.

Petitioner R.J. Reynolds Tobacco Company, a North

Carolina corporation, is the successor by merger to R.J. Rey-

nolds Tobacco Company, a New Jersey corporation. The ex-

isting R.J. Reynolds Tobacco Company 1s an indirect, wholly

owned subsidiary of Reynolds American Inc., a publicly

traded corporation. Petitioner Brown & Williamson Hold-

ings, Inc. owns approximately 42% of the common stock of

Reynolds American Inc. As noted above, Brown & William-

son Holdings, Inc. is an indirect, wholly owned subsidiary of

British American Tobacco, p.I.c., a publicly traded corpora-

tion.

Petitioner Lorillard Tobacco Company is wholly owned

by Lorillard, Inc., which is wholly owned by Loews Corpora-

tion. Shares of Loews Corporation are publicly traded.

_Other subsidiaries of Loews Corporation that are not wholly

owned by Loews Corporation but have some securities in the

hands of the public are CNA Financial Corporation and Dia-

mond Offshore Drilling, Inc. In addition, Loews Corporation

indirectly owns 100% of the general partner of Boardwalk

Pipeline Partners, LP, whose subsidiaries, Boardwalk Pipe-

lines, LP and Texas Gas Transmission, L.L.C., have issued

ill

bonds that are publicly owned. Loews Corporation has also

issued Carolina Group stock, a publicly traded tracking stock.

Petitioner Liggett Group LLC (“Liggett”), formerly

known and sued in this matter as Liggett Group Inc. and

Brooke Group Holding Inc., is a Delaware limited liability

company. Vector Group Ltd. indirectly owns 100% of the

interest in Liggett. Vector Group Ltd. is publicly traded on

the New York Stock Exchange. No publicly held company

owns 10% or more of Vector Group Ltd.’s stock.

Petitioner The Tobacco Institute, Inc. is a dissolved not-

fof-profit corporation organized under New York law. Dur-

ing its existence The Tobacco Institute, Inc. did not issue

stock and had no parent corporation. In addition, since its

dissolution, The Tobacco Institute, Inc. has not issued stock

and has had no parent corporation.

Petitioner The Council for Tobacco Research U.S.A.,

Inc. is a dissolved New York not-for-profit corporation. It

was dissolved pursuant to the New York Not-for-Profit Cor-

poration Law on November 6, 1998. Prior to its dissolution,

it had no parent companies, subsidiaries, affiliates, or stock-

holders.

The other parties to the proceeding in the Florida Su-

preme Court, respondents here, were Frank Amodeo,

Robert W. Angell, Ralph Della Vecchia (as Personal Repre-

sentative of the Estate of Angie Della Vecchia), Howard A.

Engle, Mary Farnan, Raymond Lacey, Loren E. Lowery, Mi-

chael Mayti, and Frosene D. Steevens.

iv

TABLE OF CONTENTS

Page

RFE e BE Ue FRIES EOE on essnvesesersscsccncsincavneionsensoretsnnsehsions i

RULE 14.1(b) AND 29.6 STATEMENT ..............cccceseesseeeees li

EPR I FAT BIE Ce Sovicesccssnsssicescnnnscsesenscoscnsssesoesasinns vi

SEE EIT OT icsusiis dive ccepnioepvicessti tivbindasnenstesnsisoinenseluiinsan ]

IEG iaieienictinienninpniniiinesiniiitaenontccuinctguwivicsineimelennnita 1

STATUTORY PROVISION INVOLVED ...............c:cccesseeeee 2

Eg, 5 RRR IRIE er cea le pts ae OE EE 2

REASONS FOR GRANTING THE PETITION ................. 12

I. THE FLORIDA SUPREME COURT HAS

ABANDONED A FUNDAMENTAL DUE

PROCESS LIMITATION ON THE USE OF

PRI silts csrcuadissansiptgancaadobiiinssiciebeteaersieeneswes 12

A. Due Process Prohibits Giving Preclusive

Effect To Verdicts That Are Too General To

Reveal The Actual Facts That Were Found. ............ 12

B. The Generalized Phase I Findings Fail To

Satisfy The Constitutional Prerequisites For

PN deli ciscsaseintaceabieismichcacinbiicisatnionsxacacenqaans 14

C. The Sweeping Consequences Of The

Preclusion Ruling Warrant Immediate

PIS siispiccdaninegeechaiaisilsatbeaibdiitesnccebmihincesanvicermsins 18

II. THE JUDGMENT BELOW UNDERMINES

FEDERAL PREEMPTION AND REFLECTS

THE WIDESPREAD CONFUSION CAUSED

BY THIS COURT’S DECISION IN

EIS Ness ecinussarchenniasdiahsAcaleweiaciipnnnssstinrsicininenses 20

A. Respondents’ Claims Are Functionally

Equivalent To Those Held Preempted In

ea siAllc Nai tih thncincnsscbinbinciuesciussesbnseverarecescsosene 20

B. This Court’s Review Is Needed To Resolve

The Conflict As To Whether Characterizing

Failure-To-Warn And Neutralization Claims

As Fraudulent Conduct Claims Defeats

Paden di ckscilacsdenspecaiaisnssicsssonsnscsscacencacescese 24

C. The State Appellate Courts’ Failure To

Address The Preemption Issue Does Not

Render This Case Unworthy Of Review. ................. 29

a lo da apaeccnacecesSncoceseseessvesecoscosesone 30

APPENDIX A: Opinion of the Supreme Court of

Florida, dated December 21, 2006 ...................:secceeee00 la

APPENDIX B: Opinion of the District Court of Ap-

peal of Florida, Third District, dated May 21,

Bie React a hactgiakaiccavinantabsdsibdnscnsnessrnicensveceons 68a

APPENDIX C: Final Judgment and Amended Om-

nibus Order of the Circuit Court of the Eleventh

Judicial Circuit for Miami-Dade County, Florida,

ES PRI Fo BIO vcnicnsiscasetcnccsccessccencisocccccees 127a

APPENDIX D: Order of the Supreme Court of

Florida on Rehearing, dated December 21, 2006.... 187a

APPENDIX E: Defendants’ Proposed Jury Instruc-

tion on Preemption, dated June 14, 1999.00.00... 190a

APPENDIX F: Phase I Verdict Form, dated July 7,

ee Aad a ditnhitiosasasnsnisisesswacooseeees. 192a

APPENDIX G: Post-Cipollone Decisions Address-

ing Preemption of “Concealment” and “Neutrali-

eg EERE ID a a ey ee 207a

vi

TABLE OF AUTHORITIES

Page(s)

CASES

Aetna Health Inc. v. Davila, 542 U.S. 200 (2004).............. 28

Allgood v. R.J. Reynolds Tobacco Co., 80 F.3d 168 -

alt UD sciicasisucicd sictuntsde scamnnkecncuiiiansapbecbeialiaick niaaheicen 26

American Tobacco Co. v. Grinnell, 951 S.W.2d 420

CR Rae Techies sina stil piaapiaassinigdbiigeibubenhonsicisestsipnis 25, 26

Baldwin v. Alabama, 472 U.S. 372 (1985) .......:...csccseeeseees 27

Brady v. Maryland, 373 U.S. 83 (1963)...........:ccesceseecesereeees 2

Broussard v. Meineke Discount Muffler Shops, Inc.,

LO Fe Bok Rs BT siviiicisescieinescvinniventivinanavins 20

Brown v. Brown & Williamson Tobacco Corp., 479

Fee ne CP a PT Bicicaitadciciolatenccacnenesantomes 25-26, 28

Calhoon v. Harvey, 379 U.S. 134 (1964).........ccccssceeesseeees 29

Cantley v. Lorillard Tobacco Co., 681 So. 2d 1057

RN, os cen esha ala sala anak prscinadnnncasanintibstedslatasinn 25, 28

COTW. COU RO Ue Fo 1 OD vecisintcsccnssisisanntsnbarshenniucnion 13

Cipollone v. Liggett Group, Inc., 505 U.S. 504

2, «| SRST mR ER OEE BL emt rr ee earner nee passim

Cox Broad. Corp. v. Cohn, 420 U.S. 469 (1975)..........:..:00+ 2

Cromwell v. Sac County, 94 U.S. 351 (1876) ............ eee 13

De Sollar v. Hanscome, 158 U.S. 216 (1895)............cceee 12

Dodge v. Cotter Corp., 203 F.3d 1190 (10th Cir.

FELL REE TI OE TOON OL SOT 14

The Duchess of Kingston’s Case, 20 Howell’s State

SD FE 0 OR iss incttiasceentstdtinitcnaniansietionmbies 12-13

Fayerweather v. Ritch, 195 U.S. 276 (1904) .....s0...- 3, 13-14

Vil

TABLE OF AUTHORITIES—continued

Page(s)

In re Fibreboard Corp., 893 F.2d 706 (Sth Cir. 1990)........ 2¢

Gasoline Prods. Co. v. Champlin Refining Co., 283

Re Se RID juctsisecanuiticbasinlsesbahianasiediins ecisancutanicinnsiceceesi 17

Good v. Altria Group, Inc., 436 F. Supp. 2d 132 (D.

Be MN acon lane lta set hs Gaaiceos hntitnaveccevanaitin 27

Hansberry v. Lee, 311 U.S. 32 (1940) ......... ce ceeseseeseeeesenes 12

Honda Motor Co. v. Oberg, 512 U.S. 415 (1994) .......0002.. 12

Lacey v. Lorillard Tobacco Co., 956 F. Supp. 956

Rn I A FA cencanenticcciceonsintnsuntrveuintabnsvcnasnenisnaaseabesas 26

Lawrence v. Chater, 516 U.S. 163 (1996) .......... ce eeeeeeeeee 30

Lorillard Tobacco Co. v. Reilly, 533 U.S. 525 (2001)........ 23

Radio Station WOW, Inc. v. Johnson, 326 U.S. 120

I chcentiiacadaicisinidin a tan ection Golcahaasaseibbhasbubidiickdceineennex pane 2

In re Repetitive Stress Injury Litig., 11 F.3d 368 (2d

Cs diecast ohccss abiciassehdidaeness snsnantmndbiiaectameaaiioankin 20

Richards v. Jefferson County, 517 U.S. 793 (1996)............ 12

Rivera v. Philip Morris, Inc., 395 F.3d 1142 (9th Cir.

5g NOE OE ACE EERE ST RTE OTT TS 29

Russell v. Place, 94 U.S. 606 (1876).............::c::ccccceeee id, 8F

Sawyer v. Woodbury, 7 Gray 499 (Mass. 1856) ................. 13

SEC v. Monarch Funding Corp., 192 F.3d 295 (2d

8, _, AE RAE SPR noes Meer RC a NTO? ORO AORN 14

South Cent. Bell Tel. Co. v. Alabama, 526 U.S. 160

(i » Seen ink nheliaaniaindendich dalle scabies 12

Spain v. Brown & Williamson Tobacco Corp., 363

Be SS CO is a vissnesintinvidcnnssibabenesactvi 26, 28

Vili

TABLE OF AUTHORITIES—continued

Page(s)

TXO Prod. Corp. v. Alliance Res. Corp., 509 U.S.

| SAREE RRANI SRE Setar carotene en ONCE ae eee 12

United States v. Centennial Sav. Bank FSB, 499 U.S.

I ci nia acetal adina dharani napabaksenbanerenivedain 18

Whiteley v. Philip Morris Inc., 117 Cal. App. 4th 635

re GI Planta iecet siti icsncpcaneniasiehciikginksnitlniabisjscaiauncoisas 27

Youngblood v. West Virginia, 126 S. Ct. 2188 (2006)........ 30

STATUTES

ee AIR IOTD capaevcareeensscvereesniate EASIER eine 10

Gh sills daeonsdvasstcbnsysncnbaabiypila 18

an I Ii orci had paced hcalsdscivshiubeaconasaisasicbaosciniubicsd 21

a i iii sas oiscieniclinscesiva abaienirediesoacptiaii 22

I anh sles scotia aiabueiibnedumswindei 2,21

A a lcci docile eadavcanibiiececinioundunesiniiaeen 1,2

MISCELLANEOUS

2 COKE, THE FIRST PART OF THE INSTITUTES OF THE

LAWS OF ENGLAND; OR, A COMMENTARY ON

LITTLETON (London, W. Clarke 1817).............:c.c::eceee 12

18 MOORE’S FEDERAL PRACTICE (3d ed. 1998) ................. 14

WELLS, A TREATISE ON THE DOCTRINES OF RLS AD-

JUDICATA AND STARE DECISIS (1878) ..........ccccccseeeseeees 13

PETITION FOR A WRIT OF CERTIORARI

OPINIONS BELOW

The opinion of the Supreme Court of Florida (App. A,

infra) is reported at 945 So. 2d 1246. The opinion of the

Third District Court of Appeal (App. B, infra) is reported at

853 So. 2d 434. The relevant order of the Circuit Court of

the Eleventh Judicial Circuit for Miami-Dade County (App.

C, infra) is reported at 2000 WL 33534572.

JURISDICTION

The opinion of the Supreme Court of Florida was filed

on July 6, 2006. That court issued a slightly revised opinion

on December 21, 2006, but otherwise denied petitioners’ re-

quest for rehearing. On March 19, 2007, Justice Thomas ex-

tended the time to petition for certiorari to May 20, 2007.

This Court’s jurisdiction is invoked under 28 U.S.C.

§ 1257(a). This case began as a massive class action for per-

sonal injuries allegedly suffered by more than 700,000 ciga-

rette smokers. It is the first smokers’ class action to be tried

to judgment. Despite recognizing that the class had to be de-

certified, the Florida Supreme Court issued an unprecedented

ruling that certain vague jury findings from the class trial are

to have “res judicata effect” in new suits brought by individ-

ual members of the former class. This petition raises two

questions concerning that judgment: whether the decision to

give preclusive effect to the generalized jury findings vio-

lated due process; and whether the verdicts, both classwide

and in favor of two individual respondents whose claims

were fully tried, were barred by federal preemption.

The Florida Supreme Court’s ruling terminates this case,

but for the possibility that those two individuals may elect to

seek punitive damages on remand. The preclusion ruling,

which is the subject of the due process challenge, has no ef-

2

fect on those two individuals and thus is final for purposes of

Section 1257 no matter what they elect to do.

As for federal preemption, this Court has jurisdiction be-

cause that issue “will survive and require decision regardless

of the outcome of future state-court proceedings.” Cox

Broad. Corp. v. Cohn, 420 U.S. 469, 480 (1975). Any sub-

sequent hearing on individual punitive damages claims could

not “foreclose or make unnecessary” a ruling on the preemp-

tion issue. Jd. Jurisdiction under Section 1257 thus is appro-

priate because, like the accounting in Radio Station WOW,

Inc. v. Johnson, 326 U.S. 120, 123-25 (1945), the further

state-court proceedings in this case would decide nothing but

the final sum of money that will be awarded to the two indi-

viduals. See also, e.g., Brady v. Maryland, 373 U.S. 83, 85

n.1 (1963) (jurisdiction existed over due process challenge to

a criminal conviction even though defendant’s sentence had

not yet been finally determined).

STATUTORY PROVISION INVOLVED

15 U.S.C. § 1334(b) provides: “No requirement or pro-

hibition based on smoking and health shall be imposed under

State law with respect to the advertising or promotion of any

cigarettes the packages of which are labeled in conformity

with the provisions of this chapter.”

STATEMENT

This case arises out of an enormous class action involv-

ing what plaintiffs estimated to be 700,000 citizens and resi-

dents of Florida who suffered or are suffering from illnesses

caused by their addiction to cigarettes. The Florida Supreme

Court upheld multimillion-dollar compensatory awards to

two individual plaintiffs, but recognized that class action

treatment was inappropriate and ordered the class decertified.

Nonetheless, adopting what it termed a “pragmatic solution,”

the court announced on its own initiative that certain highly

generalized findings made by the jury regarding unspecified

3

acts by petitioners over a 50-year period would have “res ju-

dicata effect” in individual suits by former class members.

Two fundamental defects plague this ruling and, if not

addressed by this Court, will contaminate all cases filed by

individual class members. First, the ruling conflicts with

long-standing and universally accepted limitations on the use

of issue preclusion — limitations that this Court has held to be

required by due process. The findings to which the Florida

Supreme Court has given preclusive effect were the product

of a sprawling, year-long trial that touched upon myriad as-

pects of five separate defendants’ conduct in designing,

manufacturing, and marketing cigarettes over half a century.

The resulting verdicts give no indication which of respon-

dents’ numerous and varied allegations of wrongful conduct

the jury credited. Instead, the jury retumed a set of abstract

and generalized findings — for example, that petitioners

“were negligent” and that they sold cigarettes that “were de- .

fective.” Thus, although the jury found that petitioners en-

gaged in wrongful conduct, its findings do not reveal what

petitioners did wrong.

Yet the Florida Supreme Court has directed that those

generalized findings be treated as preclusive in all follow-on

litigation. As judges and juries throughout Florida attempt to

implement the Florida Supreme Court’s mandate in new

cases, they will be called upon to make unfounded guesses

about what the jury’s findings mean. Giving res judicata ef-

fect to these findings violates a basic due process rule an-

nounced over a century ago: Where evidence “was offered at

the prior trial upon several distinct issues, the decision of any

one of which would justify the verdict or judgment,” that

verdict or judgment cannot be taken as “an adjudication upon

any particular issue or issues; and the plea of res judicata

must fail.” Fayerweather v. Ritch, 195 U.S. 276, 307 (1904).

Moreover, the Florida Supreme Court’s decision is em-

blematic of the tendency of some courts to use the tools of

4

aggregation to push the adjudication of mass tort claims be-

yond previously recognized boundaries in the name of effi-

ciency. If not corrected, the decision below will generate a

series of artificial “trials” in which key aspects of plaintiffs’

proof and defendants’ defenses will be reduced to a charade.

Certiorari is warranted to make clear that state courts may not

sacrifice long-standing protections of the right to a full and

fair trial merely because they find it “pragmatic” to do so.

The time for review is now, before petitioners and the courts

are subjected to the substantial burdens of those constitution-

ally impermissible proceedings.

Second, both the generalized jury findings and the indi-

vidual damages awards rest on evidence, arguments, and

theories of liability that are preempted by federal law. In

Cipollone v. Liggett Group, Inc., 505 U.S. 504 (1992), this

Court held that the Federal Cigarette Labeling and Advertis-

ing Act (“Labeling Act”) expressly preempts claims (1) that

cigarette manufacturers failed to warn the public about the

health effects of smoking or (2) that manufacturers, through

advertising or promotion, “neutralized” the effect of the fed-

erally mandated labels that explicitly warn the public about

those health effects. In this case, respondents advanced just

such failure-to-warn and neutralization claims. Nevertheless,

petitioners’ preemption objections were overruled on the the-

ory that Cipollone does not require preemption of such

claims when labeled as “fraud” claims or treated as falling

within other traditional causes of actions such as “negli-

gence.”

This case thus illustrates the substantial uncertainties that

have divided the lower courts over the proper interpretation

of Cipollone. Because of the recurring and central nature of

this issue in tobacco litigation, there is a pressing need for

this Court to dispel the confusion created by its fractured de-

cision in Cipollone by making clear that concealment and

neutralization claims are preempted, however they are la-

5

beled. Review of this issue is also warranted because the re-

jection of petitioners’ preemption defense, coupled with the

Florida Supreme Court’s preclusion holding, sets the stage

for findings resting on preempted theories to be given effect

in cases brought by former class members across the State.

Deferring review would allow error to be injected into poten-

tially every one of those cases, creating a mess that would

take years to clean up, with a monumental waste of resources

in the meantime.

1. This case began in May 1994, when six individuals

filed a class action complaint in the Florida Circuit Court for

Miami-Dade County seeking damages from petitioners, the

major domestic cigarette companies, for injuries allegedly

caused by smoking. App., infra, 69a-70a. They sought hun-

dreds of billions of dollars in compensatory and punitive

damages. /d. at 74a. A class was ultimately certified consist-

ing of an estimated 700,000 Floridians (and their survivors)

“who have suffered, presently suffer or who have died from

diseases and medical conditions caused by their addiction to

cigarettes that contain nicotine.” Jd. at 6a.

Over petitioners’ objections, the trial court implemented

a multi-phased trial plan. Phase I consisted of a year-long

trial of asserted “common issues” relating to petitioners’

conduct and the general health effects of cigarette smoking.

App., infra, 6a. During this phase, respondents presented

evidence of many different kinds of alleged misconduct oc-

curring over more than five decades. Asserting negligence

and product defect, for instance, respondents advanced hun-

dreds of different allegations relating to the design, manufac-

ture, and marketing by different petitioners of a wide array of

cigarette brands. Similarly, asserting fraud and breach of ex-

press warranty, respondents introduced thousands of com-

munications — from tobacco advertisements and promotional

materials to public statements by tobacco companies — that

6

allegedly concealed material information or made various

false representations.’

None of this evidence was linked to the circumstances of

any identifiable class member. See T.36358-59; T.36445;

T.36746. In allowing this agglomeration of diverse evidence

of petitioners’ actions — none of which could possibly have

affected all class members, and only a small fraction of

which would have been admissible in any individual’s case —

the court effectively permitted respondents to try the case as

though the class consisted of a fictional composite plaintiff

who smoked every cigarette brand; saw, heard, and relied

upon every tobacco advertisement; and developed every pos-

sible smoking-related injury. The prejudice inherent in this

procedure was compounded by the misconduct of respon-

dents’ trial counsel, who likened petitioners’ activities to the

horrors of slavery and the Holocaust, repeatedly engaged in

racial pandering before the predominantly African-American

jury, and expressly invited the jury to disregard the law.’

' See, e.g., T.11202 (testimony concerning the “Frank Statement” of

1954); T.12879-82 (testimony concerning a presentation focusing on 65-

70 different tobacco advertisements, including ads for Camel cigarettes,

Chesterfields, and Virginia Slims); T.16385-86 (introduction of Joe

Camel ads from Rolling Stone magazine, discussion of Sports Illustrated

cigarette promotions and product placements in various films); T.18695-

98 (testimony concerning how various magazines refused to publish in-

formation about the health effect of cigarettes out of concern about losing

advertising revenue); T.18983-89 (testimony concerning advertising from

the 1930s and 1940s involving doctors’ endorsement of cigarettes).

2 See, e.g., T.36348 (“You want to be fair, and you say: Right, there’s

two sides to every question. What’s the other side to the holocaust?

*** What is the other side to slavery?”); T.36490 (“The whole civil

rights movement of the ’60s was fighting against unjust laws. Dr. King

was arrested in the °60s.”); T.36371 (“[Defendants say:] It’s a legal

product. It’s a legal product. Legal don’t make it right.”).

7

Not only did respondents present multiple, alternative

theories of wrongdoing in support of each of their legal

claims, and seek to substantiate their theories with a blizzard

of different acts and omissions, but they proposed a verdict

form that asked nothing more than highly generalized ques-

tions about defendants’ conduct. App., infra, 192a-206a.

Petitioners objected (R.215: 49493-49532), arguing that, if

the Phase I verdicts were to be used by new juries in future

proceedings, the verdict form had to be sufficiently detailed

to identify the factual content of and basis for the jury’s ulti-

mate findings. The trial court rejected petitioners’ objection

and adopted respondents’ generalized form. 1T.35893-95;

T.35952-54.

Accordingly, the jury’s findings are remarkably abstract.

The jury found, inter alia, that petitioners:

e “placed cigarettes on the market that were defec-

tive and unreasonably dangerous”;

e “made a false or misleading statement of material

fact with the intention of misleading smokers”;

e “concealed or omitted material information not

otherwise known or available knowing that the ma-

terial was false or misleading or failed to disclose a

material fact concerning the health effects or addic-

tive nature of smoking cigarettes or both”;

e “sold or supplied cigarettes that were defective”;

e “were negligent”; and

e sold or supplied cigarettes that “did not conform to

representations of fact” made by petitioners.

App., infra, 6a-7a, 192a-206a.° It is impossible to ascertain

from these findings which of the various designs of petition-

* Petitioners do not challenge giving preclusive effect to two sufficiently

specific causation findings: that smoking causes certain enumerated dis-

8

ers’ hundreds of cigarette brands were defective, in what

ways they were defective, what facts were concealed or by

whom, which cigarettes failed to conform to which represen-

tations, or how petitioners had acted negligently.

In Phase II-A, the same jury heard evidence relating to

three individual smokers hand-picked by respondents’ coun-

sel: Frank Amodeo, Angie Della Vecchia, and Mary Farnan.

App., infra, 7a. It determined that certain (again unspecified)

conduct found wrongful in Phase I caused injury to those in-

dividuals, awarding compensatory damages totaling $12.7

million. In Phase II-B, the jury awarded a lump sum of $145

billion in punitive damages.

2. Throughout Phases I and II, respondents were al-

lowed to adduce evidence and arguments relating directly to

contentions that petitioners submit were expressly preempted

by the Labeling Act. In particular, respondents claimed that

(1) petitioners concealed information or failed to provide

adequate warnings about the health risks of smoking and (2)

petitioners’ advertising “neutralized” the federally mandated

warning labels. See infra, II.A. When petitioners objected,

the court expressed contempt for the very idea of federal pre-

emption, saying that it “[b]oils my blood and boggles my

mind” and suggesting that preemption “doesn’t apply to

modern science and what’s happening today.” T.16621-22.

At the close of Phase I, petitioners proposed an instruc-

tion to make clear to the jury that it could not base liability

on preempted theories, including concealment and “neutrali-

zation.” App., infra, 190a-191la. The trial court rejected pe-

titioners’ proposal. The instruction given by the court said

nothing about “neutralization” and, although it stated that re-

spondents’ claims could not be based on a mere failure to

warn after 1969 (when Labeling Act preemption took effect),

eases; and that cigarettes containing nicotine are addictive or dependence

producing. App., infra, 6a, 193a-194a.

9

it advised the jury — incorrectly — that “federal law does not

limit the liability of any defendant for claims based on negli-

gence, strict liability, express warranty, fraud, misrepresenta-

tion, or conspiracy.” T.37569-70.

Following the Phase II-B verdict, petitioners moved, in-

ter alia, for class decertification, remittitur, and judgment as

a matter of law. The trial court denied these motions. App.,

infra, 127a-186a. Rejecting petitioners’ preemption argu-

ments, the court held that federal law “certainly does not pre-

empt any acts of fraud or conspiracy committed by the de-

fendants subsequent to 1969.” Jd. at 138a. The court entered

a final judgment ordering petitioners immediately to pay (1)

the compensatory damages awarded to the three individual

plaintiffs whose claims were tried in Phase II-A and (2) the

$145 billion punitive damages award. /d. at 183a-185a.

3. The Florida Third District Court of Appeal reversed

the judgment in its emtirety and ordered the class decertified.

App., infra, 68a-126a. Citing the extensive body of case law

refusing to certify smokers’ claims as class actions (id. at

75a-77a), the court held that “this case presents a multitude

of individualized issues which make it particularly unsuitable

for class treatment” (id. at 87a). Indeed, “each class member

had unique and different experiences that will require the

litigation of substantially separate issues.” Jd. at 81a. The

court also concluded that the $145 billion punitive damages

award was excessive. /d. at 99a-103a. In addition, it held

that reversal was required due to the “inherent[ly] inflamma-

tory” jury nullification arguments and racial pandering of re-

spondents’ counsel, which “deprived the defendants of due

process and a fair trial.” /d. at 117a-118a. Having reversed

on these grounds, the court did not address petitioners’ other

assignments of error, including Labeling Act preemption.

4. On July 6, 2006, a divided Florida Supreme Court

overturned much of the Court of Appeal’s decision. App.,

infra, \a-67a. It unanimously upheld the vacatur of the mas-

10

sive punitive damages award (App., infra, 2a), but a narrow

majority concluded, with no analysis, that the “trial court did

not abuse its discretion in certifying the class” (id. at 27a).*

The Supreme Court agreed with the Court of Appeal that the

predominance of individual issues and “problems with the

three-phase trial plan negate the continued viability of this

class action.” Jd. at 27a. Nevertheless, it opted for what it

termed the “pragmatic solution” of decertifying the class only

prospectively (id. at 30a-31a), invoking, on its own initiative

(without briefing or argument) Florida’s equivalent of Fed.

R. Civ. P. 23(c)(4)(A) to preserve the jury’s Phase I findings

on various issues (id. at 27a-30a).° The court ruled that those

findings “will have res judicata effect” in new actions to be

filed against petitioners by members of the decertified class.

Id. at 31a. (Class members were given until January 2008 to

file their individual cases. Jd.) Finally, the court reinstated

the awards to Farnan and Della Vecchia. Jd. at 39a-43a.

In dissent, Justice Wells identified the fundamental flaws

in the majority’s “harmful and confusing” decision. App., in-

fra, 57a. The dissent argued that the constitutional defects in

both the original trial plan and the majority’s “pragmatic so-

* The majority also concluded that the “inappropriate” arguments of re-

spondents’ counsel — while “ventur[ing] very close to the line of reversi-

ble error” — did not warrant reversal. App., infra, 33a. In the course of

addressing this issue, the majority made a fleeting reference to preemp-

tion, asserting that “[a]lthough compliance with the federal warnings pre-

empted any claim based on failure to warn, it did not eliminate the other

causes of action that the jury had to consider in Phase I.” /d. at 38a.

* All Phase I findings were preserved except (1) the findings relating to

fraud by affirmative misrepresentation and intentional infliction of emo-

tional distress, which the court acknowledged “involved highly individu-

alized determinations”; and (2) the finding that petitioners engaged in

conduct that “would permit a potential award or entitlement to punitive

damages.” App., infra, 31a. The Florida Supreme Court offered no basis

for distinguishing other equally individualized determinations, such as the

fraudulent concealment and express warranty findings.

11

lution” required decertification of the class in its entirety and

invalidation of all the Phase I findings.

5. Petitioners moved for rehearing, contending, inter

alia, that the “res judicata” holding violated due process and

that the preemption issue required resolution. Respondents’

Motion for Rehearing in the Florida Supreme Court (August

7, 2006).° Petitioners asked the Florida Supreme Court to

vacate the generalized Phase I findings challenged here and

to clarify that the Court of Appeal should decide the preemp-

tion issue on remand. Jd. at 30. While slightly altering its

original opinion, the Florida Supreme Court denied rehearing

without addressing petitioners’ due process argument or their

request for clarification of the status of preemption. App., in-

fra, 187a-189a. On remand, petitioners asked the Court of

Appeal to resolve the various issues — including preemption —

that had not yet been addressed on appeal. That request was

denied without comment. The Florida appellate courts thus

have definitively upheld Farnan’s and Della Vecchia’s com-

pensatory damages awards — and set the stage for significant

follow-on litigation — while ignoring petitioners’ repeated ar-

guments that respondents’ claims are preempted.

* In their original briefing, petitioners had pointed out to the Florida Su-

preme Court that preemption was an independent basis for affirming the

Court of Appeal’s decision and contended that it would need to be ad-

dressed if that decision were reversed. Brief On The Merits Of All Re-

spondents Other Than Liggett And Brooke (July 16, 2004) at 40.

&

12

REASONS FOR GRANTING THE PETITION

I. THE FLORIDA SUPREME COURT HAS ABAN-

DONED A FUNDAMENTAL DUE PROCESS

LIMITATION ON THE USE OF PRECLUSION.

A. Due Process Prohibits Giving Preclusive Effect

To Verdicts That Are Too General To Reveal

The Actual Facts That Were Found.

A decade ago, this Court unanimously observed that “ex-

treme applications of the doctrine of res judicata may be in-

consistent with a federal] right that is fundamental in charac-

ter.” Richards v. Jefferson County, 517 U.S. 793, 797 (1996)

(internal quotation marks omitted). The Court struck down

one such extreme application in Richards and another in

South Central Bell Telephone Co. v. Alabama, 526 U.S. 160,

168 (1999). See also Hansberry v. Lee, 311 U.S. 32, 40-46

(1940). The Court’s rejections of extreme applications of

preclusion are specific instances of the general principle that

“abrogation of a well-established common-law protection

against arbitrary deprivations of property raises a presump-

tion that its procedures violate the Due Process Clause.”

Honda Motor Co. v. Oberg, 512 U.S. 415, 430 (1994); see

also TXO Prod. Corp. v. Alliance Res. Corp., 509 U.S. 443,

457 (1993).

The preclusion ruling here runs afoul of just such limita-

tions by abandoning the deeply rooted principle that a deter-

mination in an earlier proceeding cannot be given preclusive

effect in a later case unless “it is certain that the precise fact

was determined by the former judgment.” De Sollar v.

Hanscome, 158 U.S. 216, 221 (1895). This rule was en-

trenched in English law no later than 1628, when Sir Edward

Coke noted that “[e]very estoppell * * * must be certaine to

every intent, and [is] not to be taken by argument or infer-

ence.” 2 COKE, THE FIRST PART OF THE INSTITUTES OF THE

LAWS OF ENGLAND; OR, A COMMENTARY ON LITTLETON 4

352a (London, W. Clarke 1817); see also The Duchess of

13

Kingston’s Case, 20 Howell’s State Trials 538 (House of

Lords 1776) (preclusion requires a determination “directly

upon the point” and may not be applied to any finding that

can only “be inferred by argument”), quoted in 1

GREENLEAF, A TREATISE ON THE LAW OF EVIDENCE 697—

698 (10th ed. 1860).

By the time of the Fourteenth Amendment, American

courts had uniformly adopted the rule that a party cannot be

precluded from litigating an issue in a subsequent case unless

the issue has been specifically and ascertainably decided in

prior litigation. See, e.g., Cecil v. Cecil, 19 Md. 72, 1862

WL 2345, at *5 (1862); Sawyer v. Woodbury, 7 Gray 499,

502-04 (Mass. 1856) (Shaw, C.J.); WELLS, A TREATISE ON

THE DOCTRINES OF RES ADJUDICATA AND STARE DECISIS

173 (1878). This Court has repeatedly embraced this funda-

mental! limitation on issue preclusion, consistently refusing to

recognize an estoppel where the generality of the verdict or

judgment made the underlying findings uncertain. See, e.g.,

Russell v. Place, 94 U.S. 606, 608 (1876) (preclusion is un-

available “if it appear that several distinct matters may have

been litigated, upon one or more of which the judgment may

have passed, without indicating which of them was thus liti-

gated, and upon which the judgment was rendered”); Crom-

well v. Sac County, 94 U.S. 351, 353 (1876) (in applying

preclusion the question “must always be” what was “actually

litigated and determined in the original action, not what

might have been thus litigated and determined”).

In Fayerweather v. Ritch, 195 U.S. 276 (1904), the

Court again addressed whether a judgment may be given pre-

clusive effect if it cannot be determined whether the issue on

which preclusion is sought was actually decided in the prior

litigation. As was necessary to its assertion of jurisdiction

under the applicable statute, the Court held that abrogating

this limitation on the use of preclusion raised an issue of con-

stitutional dimension. /d. at 297-99. Precluding the litiga-

tion of issues under those circumstances “is not to be consid-

14

ered a mere error in the progress of a trial, but a deprivation

of property under the forms of legal procedure.” Jd. at 297.

Fayerweather thus established (id. at 307), as a matter of due

process, that where

testimony was offered at the prior trial upon several

distinct issues, the decision of any one of which

would justify the verdict or judgment, then the con-

clusion must be that the prior decision is not an ad-

judication upon any particular issue or issues; and

the plea of res judicata must fail.

This remains the universal rule today. See, e.g., Dodge

v. Cotter Corp., 203 F.3d 1190, 1197-99 (10th Cir. 2000) (re-

jecting application of collateral estoppel where “the general

finding under the negligence instruction fails to identify what

the jury found sustained by the evidence”); SEC v. Monarch

Funding Corp., 192 F.3d 295, 309 (2d Cir. 1999) (“when a

court cannot ascertain what was litigated and decided, issue

preclusion cannot operate”); see also 18 MOORE’S FEDERAL

PRACTICE § 132.03[2][g] (3d ed. 1998).

B. The Generalized Phase I Findings Fail To Satisfy

The Constitutional Prerequisites For Preclusion.

The Florida Supreme Court’s ruling that the Phase I jury

findings “will have res judicata effect” in the individual trials

brought by former class members squarely conflicts with the

foregoing constitutional rule.

1. During the year-long Phase I trial respondents re-

ferred to innumerable alleged acts and omissions by multiple

companies over at least half a century relating to varied as-

pects of the design, manufacture, and marketing of cigarettes.

Respondents presented scattered incidents of allegedly

fraudulent or misleading statements and omissions going

back to the 1930s, even though no single class member pos-

sibly could have heard or relied on all of them, and even

though many class members began smoking long after, or

15

quit smoking long before, the events occurred. Indeed, the

allegations about petitioners’ conduct were so broad and nu-

merous, and embraced so many d'fferent products and time

periods, that the trial judge himself remarked on the inevita-

ble difficulties of determining precisely which acts or omis-

sions, among the “hundreds,” “thousands,” or even “hun-

dreds of thousands” alleged, related to particular smokers’

claims. T.35813-16.

For example, respondents purported to substantiate their

negligence and product defect claims by referring to scores

of different cigarette types and brands marketed at different

times by different manufacturers. The evidence touched

upon various cigarettes that yielded high, medium, low, or

ultra low amounts of tar and nicotine; filtered and unfiltered

cigarettes; cigarettes with and without ventilation holes

(pores designed to dilute cigarette smoke) placed at different

distances from the tip; cigarettes with and without nicotine;

cigarettes containing different flavors, ingredients, and leaf

blends; cigarettes processed with ammonia compounds or

containing particular tar-to-nicotine ratios; and brands adver-

tised with myriad different slogans and images. E£.g.,

T.25479-519; T.25537-644; T.27574-764; see also Engle

Florida Class Mem. of Law in Opp. To Mot. For Directed

Verdict on the Issue of Strict Liability 3 (Feb. 4, 2000) (ac-

knowledging diversity of allegations presented in Phase I).’

2. Given this sprawling proceeding, petitioners proposed

the use of a detailed verdict form that would have required

” Respondents’ concealment claims were premised on similarly disparate

allegations, including, for example, that petitioners failed to disclose (1)

information about whether smoking causes disease; (2) information that

smokers of light cigarettes “compensated” by inhaling more deeply or

smoking more cigarettes; and (3) information about how certain ciga-

rettes were allegedly designed to make them more addictive. See Plain-

tiffs’ Consolidated Resp. to Motions for Directed Verdict on Behalf of

the Council for Tobacco Research 25-26 (Mar. 14, 2000).

16

the jury to return specific findings identifying the particular

information that was concealed and the specific acts and

products, if any, that were found to be negligent or defective.

Certain Defendants’ Objections To The Court’s Final Verdict

Form For Phase I (June 21, 1999). The trial court rejected

petitioners’ position. As a result, the jury’s findings provide

no clue as to which of respondents’ numerous and disparate

assertions the jury accepted or rejected.

As to product defect, for instance, the jury found simply

that “all of the defendants sold or supplied cigarettes that

were Gefective,” without revealing either the nature of the de-

fect or which of the many cigarette models sold at different

times were defective. As to negligence, the jury found

merely that “all of the defendants were negligent.” This find-

ing is a cipher; no one can say which of the acts or omissions

presented at trial the jury actually found to constitute negli-

gence. The findings on concealment are equally cryptic. The

jury concluded that petitioners “concealed or omitted mate-

rial information not otherwise known or available knowing

that the material was false or misleading or failed to disclose

a material fact concerning the health effects or addictive na-

ture of smoking cigarettes or both.” App., infra, 44a. This

finding is entirely silent as to what items of information or

material facts, among the great variety alleged by respon-

dents, were concealed or omitted. Jd. at 9a-10a.

3. The highly generalized and decidedly ambiguous na-

ture of these findings prevents any other jury from applying

them consistent with due process. There simply is no way to

identify the actual conduct underlying the Phase I findings or

to link that unidentified conduct to the specific claims as-

serted by any individual plaintiff. For instance, a plaintiff's

injury is not caused by negligence in the abstract, but rather

by a specific act that a jury finds to have been wrongful. But

the Phase I negligence finding points to no such act. Thus,

plaintiffs in the follow-on cases will ask judges and juries to

indulge in a wholly speculative, but purportedly irrebuttable,

17

presumption that the generalized findings cover the specific

facts and legal theories on which their claims are based. Al-

lowing this shortcut would relieve plaintiffs from establish-

ing certain elements of their claims, without assurance that

those elements were resolved by the earlier jury. If left un-

corrected, therefore, the preclusion ruling exposes petitioners

to liability for conduct that no jury actually found wrongful.

Consider, by way of example, a former class member

who brings a negligence action against one of the petitioners.

Instead of attempting to prove that the conduct relevant to his

particular experiences — the placement of ventilation holes on

the brand of cigarettes that he smoked, for instance — evinced

a lack of reasonable care, the plaintiff simply asserts that the

Phase I findings preclusively establish the defendant’s negli-

gence. But, as described above, the Phase I jury’s general-

ized conclusion that petitioners “were negligent” cannot be

decoded to reveal a determination that any particular defen-

dant was negligent in this particular way. A court could do

no more than guess that the finding covered the placement of

ventilation holes (or any other conduct relevant to the experi-

ences of this individual plaintiff). As this example shows,

therefore, applying the abstract Phase I findings to concrete

cases necessarily produces verdicts that cannot be said to re-

solve the elements of any individual’s claim.

Accordingly, the present case is paradigmatically one in

which “several distinct matters” were litigated, “upon one or

more of which the judgment may have passed,” but the jury’s

verdict gives no indication “upon which the judgment was

rendered.” Place, 94 U.S. at 608. Because the first jury’s

findings cannot be linked to any identifiable evidence or al-

legations, there is no way even to infer whether that jury

adopted any given basis for its liability-related findings that

would be applicable to an individual plaintiff in a follow-on

case. Cf. Gasoline Prods. Co. v. Champlin Refining Co., 283

U.S. 494, 499 (1931) (holding that multiple juries may de-

cide aspects of a single claim only where the issues are “so

18

distinct and separable” that they can be tried without “confu-

sion and uncertainty, which would amount to a denial of a

fair trial”). The Florida Supreme Court’s ruling nevertheless

gives preclusive effect to those generalized determinations.

App., infra, 31a. Four hundred years of precedent stand op-

posed to that result. The Due Process Clause forbids state

courts from sacrificing such deeply rooted and fundamental

protections at the altar of pragmatism.

C. The Sweeping Consequences Of The Preclusion

Ruling Warrant Immediate Review.

Certiorari is warranted because the Florida Supreme

Court’s preclusion ruling violates this Court’s precedents. S.

CT. R. 10(c). The need for review is further demonstrated by

the number of cases directly affected by the decision below,

the waste of resources that would occur if review is deferred,

and the potential impact of this case on other large class ac-

tions. E.g., United States v. Centennial Sav. Bank FSB, 499

U.S. 573, 578 n.3 (1991) (certiorari granted “in light of the

significant number of pending cases” affected).

The preclusion ruling will be invoked by every former

class member filing a claim against petitioners. Indeed, that

ruling promises to serve as a catalyst for such litigation, cre-

ating incentives for individual suits that otherwise would

have been absent. This effect is already being felt, as plain-

tiffs’ lawyers have begun blanketing Florida with solicita-

tions, telling prospective litigants that the scales are now

tipped decidedly in their favor. See, e.g., http://www.florida

tobaccoattorney.com (“The Florida Supreme Court has made

certain findings of fact and law that, in individual lawsuits,

could place Florida smokers at a distinct advantage — and Big

Tobacco at a distinct disadvantage.”).®

® This “disadvantage” is illustrated by complaints that have already been

filed, which invoke the Florida Supreme Court’s preclusion ruling as

conclusively establishing that any activity relating to the design, manu-

19

Because the preclusion ruling will both spur and set the

terms for these suits, this Court should resolve the significant

constitutional issues raised by that ruling now, for the benefit

of litigants and courts alike. Unless this Court acts, petition-

ers face a great many artificial and unfair new suits, in which

conventional modes of proof are likely to be significantly

distorted. In theory, the Court might postpone consideration

of the due process question while these cases wend their way

through the courts. But that would entail years of delay and

expense, burdening petitioners and the state and federal

courts in Florida with suits all predicated on the same uncon-

stitutional ruling. Under these circumstances, where the

Florida Supreme Court’s preclusion ruling cannot be applied

consistent with due process, immediate review is both neces-

sary and efficient.

Finally, the due process issues raised by this case are sig-

nificant not just in this litigation, but also to federal and state

courts throughout the country, which often confront similar

questions regarding the allowable procedures for trying mass

tort class actions involving a wide array of products. In re-

sponse to the substantial manageability challenges posed by

facture, or marketing of any cigarettes was tortious. The complaints as-

sert that plaintiffs can recover damages merely by proving that smoking

caused their illness. E.g., Compl. For Damages By Intervenors Pasquale

Caprio et al. Fj 30, 34-38, 43-48, 53-58, 64-67, Engle v. R.J. Reynolds

Tobacco Co., No. 94-08273 (Fla. 11th Cir. Ct. Mar. 7, 2007); Swindell v.

R.J. Reynolds Tobacco Co., No. 07-1171 (Fla. 8th Cir. Ct. Mar. 19, 2007)

Compl. §] 28-40; see also http://www.suebigtobacco.net/knowyour

rights.php (“Now those harmed by cigarettes need only prove that smok-

ing caused their own illness in order to recover damages.”). The lawyers

representing these plaintiffs have asserted that they “collectively repre-

sent thousands of other similarly situated Class Members,” on whose be-

half they state an intention to file similar suits within the period allowed

by the Florida Supreme Court. Mot. To Intervene to Assert Claims for

Damages and Seek Distribution from Class Fund at 4, Engle v. R.J. Rey-

nolds Tobacco Co., No. 94-08273 (Fla. 11th Cir. Ct. Mar. 7, 2007).

20

such cases, trial courts have experimented with novel proce-

dural devices. See, e.g., Broussard v. Meineke Discount

Muffler Shops, Inc., 155 F.3d 331 (4th Cir. 1998); In re Re-

petitive Stress Injury Litig., 11 F.3d 368, 373 (2d Cir. 1993);

In re Fibreboard Corp., 893 F.2d 706, 710-11 (Sth Cir.

1990). So too here, the Florida Supreme Court chose to ele-

vate such “pragmatic” considerations above fairness, apply-

ing preclusion in a way that courts (including this one) have

long disapproved. In light of the proliferation of mass tort

class actions, and the unconstitutional litigation that will be

spawned by this case itself, this Court’s guidance is needed.

Il. THE JUDGMENT BELOW UNDERMINES FED-

ERAL PREEMPTION AND REFLECTS THE .

WIDESPREAD CONFUSION CAUSED BY THIS

COURT?’S DECISION IN CIPOLLONE.

In the 15 years since this Court’s seminal but fractured

preemption decision in Cipollone, plaintiffs have adopted

various tactics in seeking to evade and erode that case’s hold-

ing, fulfilling Justice Scalia’s prophecy that the questions it

raised “will fill the lawbooks for years to come.” Cipollone,

505 U.S. at 556 (Scalia, J., concurring in the judgment in part

and dissenting in part). One of those tactics was on display

in this case: respondents were allowed to advance claims

functionally identical to those held preempted in Cipollone,

merely by characterizing those claims as involving “fraud” or

other traditional causes of action such as negligence. This

case thus presents this Court with an opportunity to provide

much-needed guidance about the scope of federal preemption

in this important context and resolve a significant and recur-

ring issue that has divided the lower courts.

A. Respondents’ Claims Are Functionally Equiva-

lent To Those Held Preempted In Cipollone.

In the Labeling Act, Congress prescribed the manner and

content of manufacturers’ warnings of smoking risks, and, to

21

maintain national uniformity, expressly barred the States

from imposing any “requirement or prohibition based on

smoking and health * * * with respect to the advertising or

promotion of any cigarettes” labeled in accordance with fed-

eral law. 15 U.S.C. § 1334(b). (This preemption provision

took effect on July 1, 1969. See Pub. L. 91-222, § 3.) In

Cipollone, this Court held that the Labeling Act preempts

state requirements that take the form of common-law duties

imposed through private damages actions. 505 U.S. at 522.

To determine whether a claim is preempted, courts must “ask

whether the legal duty that is the predicate of the common-

law damages action constitutes a ‘requirement or prohibition

based on smoking and health * * * imposed under State law

with respect to * * * advertising or promotion.”” Jd. at 524.

1. Applying this rule, Cipollone held that the Act pre-

empts claims that “post-1969 advertising or promotions

should have included additional, or more clearly stated,

warnings.” Jd. Nevertheless, one of respondents’ major

themes in this case was that petitioners concealed from

smokers information about the health risks of smoking.

Throughout Phases I and II-A, respondents asserted that peti-

tioners’ inaction left smokers unaware of those risks. For ex-

ample, during Phase I, one of respondents’ experts testified

that the cigarette manufacturers knew about “the health risks

and addictive qualities of tobacco” but had not disclosed the

information to the public” even by the early 1990s. T.13477-

78. Other witnesses testified that petitioners failed to warn

smokers that nicotine was addictive (T.12020-27; T.13479-

80) and that the public was not aware of the health risks of

smoking (T.18708-719), or the chemicals found in cigarette

smoke (T.18716-17), and particular design features of certain

cigarette types (T.16400-01). Respondents’ counsel also was

allowed to cross-examine petitioners’ witnesses as to whether

smokers had sufficient health-related information about

smoking. E.g., T.27957-58; T.28882-89; T.29261-67. At the

end of Phase I, the jury found that petitioners “failed to dis-

22

close a material fact concerning the health effects or addic-

tive nature of smoking cigarettes.” App., infra, 7a.

Similarly, the individual plaintiffs testified during Phase

II-A about their lack of knowledge of the dangers of smok-

ing, despite Congress’s pronouncement that “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 ciga-

rettes.” 15 U.S.C. § 1331(1). Farnan, for instance, testified

that she did not know “how many carcinogens were con-

tained in cigarette smoke,” or that ammonia was used in ciga-

rettes, or how nicotine affects the brain. T.40247-51. Rely-

ing on this and similar evidence, respondents contended that

petitioners should have provided the public with additional

health information about smoking beyond that contained in

the federally mandated warning labels.

This claim, and the jury findings made in response to it,

are invalid under the Labeling Act. Indeed, the Florida

courts did here just what Cipollone prohibits: They imposed

a requirement on petitioners to make public disclosures with

regard to smoking and health that go beyond the warning

statements prescribed by Congress. Such a requirement is

inconsistent with a basic purpose of the Labeling Act — to en-

sure that cigarette manufacturers’ warning requirements re-

main uniform from State to State. See 15 U.S.C. § 1331.

2. A second crucial aspect of respondents’ case was that

petitioners’ marketing activities allegedly undermined or

“neutralized” the federal warning labels, leading class mem-

bers to believe that smoking was less hazardous than those

labels declared. During Phase I, for example, one of respon-

dents’ experts testified that the use of “healthy and vigorous”

people in tobacco advertising minimized the impact of the

warnings on smokers and potential smokers, including mi-

nors. T.17265; see also T.11377-78; T.17210. Respondents’

counsel drove the point home by arguing that the message

23

conveyed by cigarette advertising was: “Don’t listen to the

Surgeon General. Listen to your good friend at Philip Morris

who may send you a T-shirt or a cap.” T.36657.”

The invocation of this theory of liability continued dur-

ing Phase II-A. Farnan testified that advertisements she saw

in the 1960s, ’70s, and ’80s portrayed smoking as safe and

healthy. She added that she had never seen a cigarette ad in

which the models were “infirm or disabled in any way.”

T.42242. Reinforcing the point, an expert opined that “the

advertising convinced [Farnan] that cigarette smoking was

safe” and that, although she may have seen the warnings,

“the advertising basically convinced her that that wasn’t

true.” T.42383-84; see also T.42398-99 (testimony that ad-

vertising “prevented [plaintiffs] from actually believing that

cigarette smoking was harmful” by keeping “them in a state

of conflict and controversy”). This expert also testified that

advertising “played a major role” in convincing Della Vec-

chia to “continu[e] to smoke for an additional 20 years.”

T.43759-60; see also T.43769 (“I think the advertising of the

light cigarettes did convey the message to Mrs. Della Vec-

chia that smoking those cigarettes would be safer.”’).

Allowing respondents to pursue this theory of liability

was inconsistent with Cipollone. Under that decision, the

Labeling Act expressly preempts claims asserting that ciga-

rette advertising conveyed a “false impression” that ciga-

rettes are safe, “downplay[ed] the dangers of smoking,” or

“negate[d] or disclaim[ed]” the federally mandated warning

” See also, e.g., T.36436 (argument of respondents’ counsel that warnings

about the dangers of smoking were ignored “because there is out there

this powerful $5 billion a year spent on advertising and promotion, it’s

like whistling in the wind”). Relatedly, respondents launched frequent at-

tacks on cigarette advertising as “youth marketing” (e.g., T.10480;

T.10915-16; T.11376-77; T.13453; T.15882-87; T.16871-81; T.16900;

T.17131-54; T.17263-65), even though such attacks are preempted under

Cipollone and Lorillard Tobacco Co. v. Reilly, 533 U.S. 525 (2001).

24

labels. 505 U.S. at 527-28. Such “neutralization” claims are

“predicated on a state-law prohibition against statements in

advertising and promotional materials that tend to minimize

the health hazards associated with smoking.” Jd. at 527. As

the Court explained, this theory is the flip-side of a failure-to-

wam claim: Just as state courts may not impose liability

based on manufacturers’ failure to supplement or amplify the

warning labels, they may not impose liability based on

statements that allegedly dilute those labels. Jd. (citing 1964

FTC regulations recognizing “the relationship between pro-

hibitions on advertising that downplays the dangers of smok-

ing and requirements for warnings in advertisements”).

B. This Court’s Review Is Needed To Resolve The

Conflict As To Whether Characterizing Failure-

To-Warn And Neutralization Claims As Fraudu-

lent Conduct Claims Defeats Preemption.

1. In an effort to circumvent Cipollone, respondents

characterized the claims described above as attacking

“fraudulent concealment,” “misrepresentation,” or “negli-

gence.” The trial court ruled that the incantation of these

words sufficed to defeat petitioners’ preemption defense.

“(T]he record of the trial reflects that the plaintiffs[’] presen-

tation opted for evidence of a ‘duty not to deceive’ which

goes directly to the fraud and conspiracy exception under

Cipollone, rather than the ‘failure to warn’ preemption ele-

ment.” App., infra, 139a. The court invoked the Cipollone

plurality’s suggestion that some fraudulent misrepresentation

claims are predicated on a general “duty not to deceive” and

thus are not preempted. 505 U.S. at 528-29.'° On appeal, the

'° It was also on this basis that the trial court rejected petitioners’ pro-

posed jury instruction, which would have made clear that liability could

not be premised on any failure to provide additional information or any

neutralization of the federally mandated warnings through advertising or

promotion. R. 214: 49274. Instead, the court gave an instruction that

said nothing about neutralization and incorrectly told the jury that “fed-

25

Florida Supreme Court and the Court of Appeal allowed this

understanding of federal law to stand without comment.

In so doing, however, the Florida courts deepened a divi-

sion in the lower courts, placing themselves in conflict with

the Fifth and Eleventh Circuits and with two other state su-

preme courts. These courts have held that plaintiffs cannot

avoid preemption by recharacterizing failure-to-warn and

neutralization claims as fraud claims. The Texas Supreme

Court thus has held that a smoker’s claims were preempted

where they were “based on the allegation that [a tobacco

company] should have provided different warnings or warn-

ings in addition to those mandated by the 1969 Act or that it

otherwise concealed the dangers of smoking.” Am. Tobacco

Co. v. Grinnell, 951 S.W.2d 420, 439 (Tex. 1997). The fact

that the claims were not expressly labeled “failure to warn”

did not change the result; rather, the court held that “negli-

gent testing” and “fraudulent concealment” claims were pre-

empted because they were all premised on the manufacturer’s

“failure to disclose information regarding the dangers of

cigarettes.” Jd. at 439-40. The Alabama Supreme Court

reached the same conclusion, holding that failure-to-warn

claims, even if labeled as “fraudulent suppression” claims,

are “clearly” preempted by federal law. Cantley v. Lorillard

Tobacco Co., 681 So. 2d 1057, 1061 (Ala. 1996).

Similarly, the Fifth Circuit recently rejected efforts to

avoid preemption by recasting a claim of failure to warn as

fraudulent concealment. See Brown v. Brown & Williamson

eral law does not limit the liability of any defendant against claims based

on negligence, strict liability, express warranty, fraud, misrepresentation,

or conspiracy.” 1.37569-70. This instruction permitted respondents’

failure-to-warn and neutralization claims to escape preemption so long as

they were labeled as “fraud” or “misrepresentation” claims or packaged

as part of a strict liability, negligence, or express warranty claim. In

dicta, the Florida Supreme Court echoed this flawed understanding of

Labeling Act preemption. App., infra, 38a.

26

Tobacco Corp., 479 F.3d 383 (Sth Cir. 2007). The court ob-

served that “most courts have held that any state law claim

that would require additional communication between com-

panies and consumers is pre-empted by the Labeling Act.”

Id. at 393. Such a claim — even if described in terms of con-

cealment — “relies, by its nature, on an unfulfilled duty to

disclose additional information” and thus is preempted. /d. at

394; see also Allgood v. R.J. Reynolds Tobacco Co., 80 F.3d

168, 171 (Sth Cir. 1996); Lacey v. Lorillard Tobacco Co.,

956 F. Supp. 956, 962-64 (N.D. Ala. 1997).

The same is true of neutralization claims; since Cipol-

lone, most state and federal courts have rejected plaintiffs’ at-

tempts to evade preemption by characterizing neutralization

claims as false or deceptive advertising claims. In Grinnell,

for instance, the Texas Supreme Court held that a deceptive

advertising claim was preempted, finding that it was “prop-

erly characterized as a neutralization claim because [defen-

dant] allegedly made the deceptive statements in its advertis-

ing and promotional materials with the intent of diminishing

the impact of the federal warnings.” 951 S.W.2d at 440. The

Fifth and Eleventh Circuits agree. See Brown, 479 F.3d at

392 (“implied misrepresentation” claim preempted as equiva-

lent to the neutralization claims discussed in Cipollone);

Spain v. Brown & Williamson Tobacco Corp., 363 F.3d

1183, 1202 (11th Cir. 2004) (reading Cipollone as requiring

preemption of claims alleging “fraudulent suppression” and

“conspiracy to fraudulently misrepresent”). These courts

have recognized that they “must look beyond the descriptive

label a plaintiff attaches to a claim in determining whether or

not the claim is preempted.” Lacey, 956 F. Supp. at 963.

2. The approach to Labeling Act preemption taken in

this case is directly at odds with these decisions. In allowing

claims to survive preemption even though they rest on a duty

to disclose additional health-related information through

cigarette advertising and promotion, the Florida courts cast

their lot with a: minority of courts that have adopted the same

27

reading of Cipollone. App., infra, 208a-215a (listing pub-

lished decisions since Cipollone in which the issue has

arisen). This division of authority, combined with the fre-

quency with which this issue arises, requires the Court’s at-

tention. The conflict is particularly significant given that the

Florida courts’ approach to preemption is now at odds with

that of the Eleventh Circuit. See Baldwin v. Alabama, 472

U.S. 372, 374 (1985) (conflict between state and federal

courts in the same State is a compelling reason for review).

Moreover, as the lower-court case law reveals, there re-

mains considerable and recurring confusion about how to ap-

ply the Labeling Act in this important context. That is not al-

together surprising. Cipollone was a splintered decision, and

five of the Justices who participated in that case rejected the

plurality’s distinction between failure-to-warn claims and

fraud claims.'' The plurality itself admitted that its position

lacked “theoretical elegance.” 505 U.S. at 529 n.27. This led

Justice Blackmun to anticipate the “difficulty lower courts

will encounter in attempting to implement today’s decision.”

Id. at 543-44; see, e.g., Whiteley v. Philip Morris Inc., 117

Cal. App. 4th 635, 670 (ist Dist. 2004) (under Cipollone

“{ljine drawing is difficult as each side of the continuum has

the capacity to swallow the other”); Good v. Altria Group,

Inc., 436 F. Supp. 2d 132, 142 (D. Maine 2006) (“courts re-

main divided about what [Cipollene] means and how to ap-

ply it”). Only this Court can put an end to this accumulating

difficulty, which arises in most cases brought by smokers, by

making clear that claims attacking a failure to add to the fed-

erally mandated warnings are preempted, regardless of the

name given to those claims.

That certainly is the better reading of the Labeling Act

and of Cipollone. What matters under the Act is the substan-

"' See 505 U.S. at 543 (Blackmun, J., concurring in part, concurring in

the judgment in part, and dissenting in part); id. at 553 (Scalia, J., concur-

ring in the judgment in part and dissenting in part).

28

tive requirement the claim seeks to impose. And the sugges-

tion that any claim, regardless of its substance, containing an

asseition of “fraud” survives preemption is inconsistent with

Cipollone’s recognition that the Labeling Act does not com-

partmentalize preemption into “any familiar subdivision of

common-law claims.” 505 U.S. at 523. Indeed, Cipollone

expressly held that one of the plaintiff's claims was pre-

empted even though it involved a theory of “fraudulent mis-

representation.” Jd. at 527-28. This makes sense; smokers

should not be allowed to make an end-run around the Label-

ing Act simply by altering the names given to their claims.

Cf. Aetna Health Inc. v. Davila, 542 U.S. 200, 214 (2004)

(rejecting attempts to re-label claims to evade preemption).

It 1s true that the Cipollone plurality stated that certain

fraud claims “are predicated not on a duty ‘based on smoking

and health’ but rather on a more general obligation — the duty

not to deceive,” and on that basis escape preemption. 505

U.S. at 528-29. In context, however, this aspect of the plural-

ity opinion is focused on claims alleging “fraud by inten-

tional misstatement,” that is, claims challenging affirmative

“false statements of material fact.” Jd. By contrast, the plu-

rality stated that fraudulent concealment claims escape pre-

emption only “insofar as those claims rely on a state-law duty

to disclose such facts through channels of communication

other than advertising or promotion” — as in a disclosure to a

public agency. /d. at 528. Had the plurality believed that

concealment claims avoid preemption simply because — like

affirmative fraud claims — they rest on a general duty not to

deceive, this caveat about alternative channels would have

been wholly unnecessary.”

'2 Any effort by respondents to evade preemption by arguing that their

concealment claims did not involve “advertising or promotion” could

have been upheld only by exacerbating an existing and acknowledged

circuit split. Compare Brown, 479 F.3d 393-95; Spain, 363 F.3d at 1197;

and Cantley, 681 So. 2d at 1061 (any claim requiring additional commu-

29

C. The State Appellate Courts’ Failure To Address

The Preemption Issue Does Not Render This

Case Unworthy Of Review.

In addition to the “importance of the questions presented

and conflicting views in the courts of appeals and the district

courts,” Calhoon v. Harvey, 379 U.S. 134, 137 (1964), cer-

tiorari is warranted here in light of the manifest disregard that

the Florida courts showed for federal preemption. Con-

fronted with petitioners’ preemption arguments, the trial

judge remarked that the “whole concept of Cipollone is terri-

ble and wrong” (T.27878), which makes “truth and justice

impossible,” and declared that “I have to figure out how to

get around it” (T.16621-22). On appeal, both the Florida Su-

preme Court and the Court of Appeal remained silent in the

face of repeated pleas that the trial court’s preemption errors

had to be corrected. Thus, despite multiple opportunities to

act and without any explanation, those courts acquiesced in

the subversion of controlling federal law and in the rejection

of contrary authority from state and federal courts.

Such disregard of both federal law and proper appellate

procedure only reinforces the need for this Court’s interven-

tion. Had the Florida Supreme Court expressly addressed

and rejected petitioners’ preemption claims, the conflict be-

tween its decision and the decisions of this and other courts

would have been obvious. Review is no less appropriate

merely because that court abdicated its responsibilities by af-

firming judgments contrary to the federal Constitution and

statutes without addressing those claims. Few things could

be more destabilizing for the rule of law, and for the suprem-

acy of federal law, than for state courts to be able to disre-

gard this Court’s pronouncements — and simultaneously

nications with the public is preempted); with Rivera v. Philip Morris,

Inc., 395 F.3d 1142, 1148 (9th Cir. 2005) (interpreting “advertising and

promotion” narrowly to avoid preempting claims based on omissions

from channels such as media reports and public service announcements).

30

evade this Court’s review — simply by refusing to consider

federal issues presented to them.

Indeed, because petitioners are entitled to have their fed-

eral claims actually considered, this Court should, at a mini-

mum, grant certiorari, vacate the judgment below, and re-

mand the case for consideration of the preemption issue by

the Florida appellate courts. As this Court has observed, a

GVR “assists the court below by flagging a particular issue

that it does not appear to have fully considered” and “assists

this Court by procuring the benefit of the lower court’s in-

sight before we rule on the merits.” Lawrence v. Chater, 516

U.S. 163, 167 (1996); see also Youngblood v. West Virginia,

126 S. Ct. 2188, 2190 (2006) (using GVR where state su-

preme court failed to address federal issue presented to it).

Finally, the state appellate courts’ unexplained refusal to

enforce petitioners’ federal nights did more than permit two

individual plaintiffs to prevail on preempted theories of li-

ability. By virtue of the Florida Supreme Court’s flawed

preclusion ruling, the stage has been set for former members

of this enormous class to avail themselves of findings that

were irredeemably tainted by the same preempted theories.

If certiorari is not granted, the Florida courts’ disregard for

federal preemption will subject petitioners to adverse judg-

ments based on those theories in all the follow-on cases to

which the Florida Supreme Court has given the green light.

This result requires correction by this Court before petition-

ers and courts across Florida are subjected to the burdens as-

sociated with a long series of inherently defective trials.

CONCLUSION

The petition for a writ of certiorari should be granted.

THEODORE B. OLSON

MARK A. PERRY

AMIR C. TAYRANI

Gibson, Dunn & Crutcher

LLP

1050 Connecticut Ave., N.W.

Washington, D.C. 20036

(202) 955-8500

STUART ALTSCHULER

Winston & Strawn LLP

35 W. Wacker Drive

Chicago, IL 60601

(312) 558-5600

JOSEPH PATRICK ARCHIE

Dechert LLP

2929 Arch Street

Philadelphia, PA 19104

(215) 994 4000

DAVID S. EGGERT

Arnold & Porter LLP

555 Twelfth Street, N.W.

Washington, D.C. 20004

(202) 942-5000

Counsel for Petitioner Philip

Morris USA Inc.

31

Respectfully submitted.

ANDREW L. FREY

Counsel of Record

ANDREW H. SCHAPIRO

BRIAN M. WILLEN

Mayer, Brown, Rowe & Maw

LLP

1675 Broadway

New York, NY 10019

(212) 506-2500

KENNETH S. GELLER

Mayer, Brown, Rowe & Maw

LLP

1909 K St., N.W.

Washington, D.C. 20006

(202) 263-3000

Counsel for Petitioner Philip

Morris USA Inc.

DONALD B. AYER

Jones Day

51 Louisiana Ave., N.W.

Washington, D.C. 20001

(202) 879-3939

CHARLES R.A. MORSE

Jones Day

222 E. 41st Street

New York, NY 10017

(212) 326-7847

Counsel for Petitioner R.J.

Reynolds Tobacco Co.

DAVID L. Ross

ELLIOT H. SCHERKER

Greenberg Traurig

1221 Brickell Ave.

Miami, FL 33131

(305) 579-0500

Counsel for Petitioner

Lorillard Tobacco Co.

RICHARD A. SCHNEIDER

King & Spalding LLP

1180 Peachtree Street, N.E.

Atlanta, GA 30309

(404) 572-4600

Counsel for Petitioner Brown

& Williamson Holdings, Inc.

MAy 2007

32

AARON H. MARKS

LEONARD A. FEIWUS

Kasowitz Benson Torres &

Friedman

1633 Broadway, 22nd Floor

New York, NY 10019

(212) 506-1700

KELLY ANNE LUTHER

Clark Silverglate &

Campbell, P.A.

799 Brickell Plaza, Suite 900

Miami, FL 33131

(305) 377-0700

Counsel for Petitioner Liggett

Group LLC

JAMES A. GOOLD

Covington & Burling LLP

1201 Pennsylvania Ave., N.W.

Washington, D.C. 20044

(202) 662-6000

Counsel for Petitioner The

Tobacco Institute, Inc.