Petition for Writ of Certiorari — Philip Morris USA, Inc. v. Accord (No. 07-806)

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Supreme Court, U.S.

Tbe FILED

07-806DEC17 2007

(

O) OFFICE OF THE CLERK

PHILIP MoRRIS USA INC., BROWN & WILLIAMSON

HOLDINGS, INC., LORILLARD TOBACCO COMPANY and

R.J. REYNOLDS TOBACCO COMPANY,

Petitioners,

Vv.

RONALD ACCORD, et al.

Respondents.

On Petition for a Writ of Certiorari to The

Supreme Court Of Appeals Of West Virginia

PETITION FOR A WRIT OF CERTIORARI

ANDREW R.C. GADDES ANDREW L. FREY

BRUCE CLARK Counsel of Record

Dechert LLP ANDREW H. SCHAPIRO

2929 Arch Street LAUREN R. GOLDMAN

Philadelphia, PA 19104 KWAKU A. AKOWUAH

215) 994-4000 Mayer Brown LLP

1675 Broadway

New York, NY 10019

(212) 506-2500

Counsel for Petitioner Philip Morris USA Inc.

(Additional counsel listed on inside cover)

FIRST A TT ALTARS EE ECL TE TOPE SEITE EE SEL AEA GPL BET EE AE LATE OBE

JOHN R. MUSGRAVE DONALD B. AYER

Thompson Coburn LLP Jones Day

One US Bank Plaza 51 Louisiana Ave., N. W.

St. Louts, MO 63101 Washington, D.C. 20001

(314) 552-6000 (202) 879-3939

Counsel for Petitioner Counsel for Petitioners

Lorillard Tobacco Co. R.J. Reynolds Tobacco

Co. and Brown & Wil-

liamson Holdings, Inc.

QUESTION PRESENTED

Whether the Due Process Clause bars the use of

“reverse bifurcation” in a consolidated mass-tort

trial, whereby a defendant's liability for punitive

damages to hundreds of plaintiffs is adjudicated,

based entirely on aggregate proof, prior to any find-

ing of compensatory liability to even a single plain-

tiff.

RULE 14.1(b) STATEMENT

Petitioners are Philip Morris USA Inc., Brown &

Williamson Holdings, Inc., Lorillard Tobacco Com-

pany and R.J. Reynolds Tobacco Company. Respon-

dents are Ronald Accord and all other plaintiffs in

the case styled In re: Tobacco Litigation, Civil Action

No. 00-C-5000, Ohio County, West Virginia, as well

as the Honorable Arthur M. Recht in his capacity as

judge/special appointee of the West Virginia Mass

Litigation Panel. There are approximately 735

plaintiffs in Civil Action No. 00-C-5000, and no cap-

tion in this proceeding identifies those individuals.

Petitioners have included as an appendix to this pe-

tition an unofficial list of the plaintiffs subject to the

challenged trial order who have named one or more

of the petitioners as a defendant. See App. 77a-109a.

Twenty other defendants are subject to the chal-

lenged trial order, but were not parties to the writ of

prohibition proceeding in the Supreme Court of Ap-

peals of West Virginia. Petitioners also have in-

cluded as an appendix to this petition an unofficial

list of these defendants. See App. 110a-11 1a.

RULE 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 indirect, wholly owned subsidiary of British

American Tobacco, p.l.c., a publicly traded corpora-

tion. Before August 2, 2004, Petitioner was known as

Brown & Williamson Tobacco Corporation. On July

lll

30, 2004, a transaction was completed whereby Peti-

tioner R.J. Reynolds Tobacco Company became the

successor in interest to Brown & Williamson Tobacco

Corporation’s U.S. tobacco business.

Petitioner Lorillard Tobacco Company is wholly

owned by Lorillard, Inc., which is wholly owned by

Loews Corporation. Shares of Loews Corporation are

publicly traded. Other subsidiaries of Loews Corpo-

ration that are not wholly owned by Loews Corpora-

tion but have some securities in the hands of the

public are CNA Financial Corporation and Diamond

Offshore Drilling, Inc. In addition, Loews Corpora-

tion indirectly owns 100% of the general partner of

Boardwalk Pipeline Partners, LP, whose subsidiar-

ies, Boardwalk Pipelines, LP and Texas Gas Trans-

mission, L.L.C., have issued bonds that are publicly

owned. Loews Corporation has also issued Carolina

Group stock, a publicly traded tracking stock.

Petitioner R.J. Reynolds Tobacco Company, a

North Carolina corporation, is the successor by

merger to R.J. Reynolds Tobacco Company, a New

Jersey corporation. The existing R.J. Reynolds To-

bacco Company is an indirect, wholly owned subsidi-

ary of Reynolds American Inc., a publicly traded cor-

poration. Petitioner Brown & Williamson Holdings,

Inc. owns approximately 42% of the common stock of

Reynolds American Inc. As noted above, Brown &

Williamson Holdings, Inc. is an indirect, wholly

owned subsidiary of British American Tobacco, p.l.c.,

a publicly traded corporation.

TABLE OF CONTE™TS

Page

RPE) ae CAGE POR GD soos ci sccccenceasinsndsvornsnwidesneee i

BOAT ales WR. RO ET NB isnt sais ners cnscdecscegnenacns ll

Be Oe BSF 0 EY Eis sknccs naive scvessenannansncacennaaee ll

BPs OO FU oa vassiksnsnecsnceapcsancenccnaaeanss vil

FEF EIRP RI Be BERIT oi iniscnctcaviesscssncvunsnensssconsneaidincane 1

PTT OI a egascisansc resndarastornncnieancn antennas 1

CONSTITUTIONAL PROVISION INVOLVED ........ 1

ee Oe eG side cick caeepsakenatnandiatagcaiaecnssouae 2

REASONS FOR GRANTING THE PETITION ....... 11

I. WEST VIRGINIA’S APPROACH TO

ASSESSING PUNITIVE DAMAGES

VIOLATES DUE PROCESS. ......c.cccccccscsscssscsessees 12

A. West Virginia’s Approach Cannot Be

Reconciled With State Farm And

PP occ irssciniay ce eer ee 12

1. The Phase I Jury’s Findings Will Not

Bear A Sufficient Nexus To The

Conduct That Harmed Any

eg ae gl: A Ee ar ner 13

2. The Application Of A Uniform

Multiplier To Disparately-Situated

Plaintiffs Violates Due Process................. 18

B. The Decision Below Conflicts With

Rulings Of The Second Circuit And

CI CN io og cece cic de eee 20

TABLE OF CONTENTS—continued

Page(s)

Il. THIS COURT SHOULD GRANT REVIEW

IN ORDER TO HALT WEST VIRGINIA’S

REPEATED AND UNCONSTITUTIONAL

USE OF REVERSE BIFURCATION TO

RESOLVE AGGREGATED PUNITIVE-

DAMAGES CLAIMS IN MASS-TORT

ec. RENE Bel ae ve ear er 24

A. The West Virginia Supreme ~e of

Appeals Has Made Clear That It Will

Continue To Place Expediency Over

Concerns Of Due Process In Mass-Tort

NEI EEE ATED Ore Ono RCO ERE TREN 24

B. Immediate Review Is Warranted................... 30

era I fico ol cick a sesisagnindouaiennekevseinasondd 33

APPENDIX

APPENDIX A: Order of the Supreme Court of

Appeals of West Virginia (November 7, 2007) ......... la

APPENDIX B: Order of the Circuit Court of

Ohio County, West Virginia (August 28, 2007)....... 3a

APPENDIX C: Transcript of Hearing August

17, 2007 In the Circuit Court of Ohio County,

To aac aba pakn ean emaenemanteaira 5a

APPENDIX D: Order of the Circuit Court for

Ohio County, West Virginia (August 28, 2007)...... 15a

APPENDIX E: Transcript of Hearing May 23,

2007 In the Circuit Court of Ohio County, West

Virginia....... a SAE ARN RADI SAR LS IS ORIEN AOR RAPE BROOD l7a

TABLE OF CONTENTS—continued

Page(s)

APPENDIX F: Opinion and Order of the

Circuit Court of Ohio County, West Virginia

RPI SON I acts lelteah nelisnsneiaiiad

APPENDIX G: Opinion of the Supreme Court

of Appeals of West Virginia (December 2, 2005)....

APPENDIX H: Opinion and Order of the

Circuit Court of Ohio County, West Virginia

SII i, FIO tcnnrsccatnensccscceciedunassntencsscansatesiannnnnecs

APPENDIX I: Case Management Order/Trial

Plan of the Circuit Court of Ohio County, West

Virginin Glamwary 11, ZOGO).....0......cccececccassessssaeese

APPENDIX J: List of Plaintiffs With Claims

Pending in Civil Action No. 00-C-5000

SND Weak TED i ctaccscatenedincacacenmnansaccucisabes

APPENDIX K: List of Defendants Not Party To

the Writ of Prohibition Proceeding In the

Supreme Court of Appeals of West Virginia ........

Vil

TABLE OF AUTHORITIES

Page(s)

CASES

Allison v. Citgo Petroleum Corp.,

161 F.3d 402 (Sth Cir. 1908)...........:06.00..ss0se00 20-21

BMW of N. Am. Inc. v. Gore,

OAT UF. Te Ce, FI wankdisttsdaxiteciiccnmuans 16, 19

In re Baycol Prods. Litig.,

218 F.R.D. 197 (D. Minn. 2003)..................... 22-23

Bd. of Educ. v. Super. Ct.,

MOO UD. BGG CE an ssccsensdancsscaccicca en 1, 30

Boyd v. Goffoli,

608 S.E.2d 169 (W. Va. 2004) ....c.cccececceccceeseseeeee. 26

In re Brooklyn Navy Yard Asbestos Litig.,

STi FO SSi Cle Cat... OBE) vvssscctiernicnccee 27

Cain v. Armstrong World Indus.,

785 F. Supp. 1448 (S.D. Ala. 1992) ............... 27-28

In re Chevron USA, Inc.,

109 F.3d 1016 (Sth Cir.1997)...........cccc-escceseseeseee 32

Clinton v. Brown & Williamson Holdings, Inc.,

Nos. 05 Cv. 9908, 05 Cv. 9174 2007 WL

2161778 (S.D.N.Y. July 25, 2007) ....................-. 28

Colindres v. QuietFlex Mfg.,

Zao FB: 347 63.3. Tee. DOO) wsctccticcsscnutiean 21

Cont’ Trend Resources, Inc. v. OXY USA Inc.,

101. F.3d G34 (LOG Cir. LOBG) on neccccccccenccssscenssses,. 31

Crawford v. Taylor,

48 8.5.20 S70 CA. Va. tGG0) ote +)

Vill

TABLE OF AUTHORITIES—continued

Engle v. Liggett Group, Inc..,

945 So. 2d 1246 (Fla. 2006) (per curiam),

cert. denied, 128 S. Ct. 96 (2007)

In re Ethyl Corp.,

975 S.W.2d 606 (Tex. 1998) .................006 7

Page(s)

Gen. Motors Acceptance Corp. v. D.C. Wrecker

Serv., 647 S.E.2d 861 (W. Va. 2007)...................

Hicks v. Oklahoma,

447 U.S. 343 (1980).

Insolia v. Philip Morris Inc..,

216 F.3d 596 (7th Cir. 2000).....

Jackson v. State Farm Mut. Auto. Ins. Co.,

600 S.E.2d 346 (W. Va. 2004)............

Johnson v. Celotex Corp.,

899 F.2d 1281 (2d Cir. 1990)

Kocher v. Oxford Life Ins. Co..,

602 S.E.2d 499 (W. Va. 2004) (per curiam)

Lilly v. Virginia,

527 U.S. 116 (1999)......

Madruga v. Super. Ct..,

346 U.S. 556 (1954)

Merrick v. Paul Revere Life Ins. Co

500 F.3d 1007 (9th Cir. 2007).

Nelson v. Wal-Mart Stores, Inc.,

245 F.R.D. 358 (E.D. Ark. 2007).

31-32

TABLE OF AUTHORITIES—continued

Page(s)

O’Neal v. Wackenhut Servs., Inc.,

No. 3:03-CV-397, 2006 WL 1469348 (E.D.

FN Fs SI cisciicaniccnsencdcestcnnivernincaddaadenedaas 23

Philip Morris Inc. v. Angeletti,

TEZ A.2G BOO BEG. BOOD) .0cccccccccccccessscsccessescee 20, 21

Philip Morris USA v. Williams,

BEF Os Cr Be Ce Ricacccdnstscecdccscsnsesnccssonens passim

Ramirez v. New York City Off-Track Betting

Corp.,

112 F.3d 38 (2d Cir. 1997)................ onset 32

In re Repetitive Stress Injury Litig.,

eo * F Ff. G5 CR:

In re Simon II Litig..,

407 F.3d 125 (2d Cir. 2005) ...........0cccccccceeceeeeeees 20

State ex rel. Allman v. MacQueen,

551 S.E.2d 369 (W. Va. 2001) (per

CURIID ocenntsicinsctcicdciacressentatadeniabenistevasavioiebesseubban 28

State ex rel. Appalachian Power Co. v.

MacQueen, 479 S.E.2d 300 (W. Va. 1996).......... 25

State ex rel. Appalachian Power Co. v. Ranson,

Ge Fe te COE. Fi BD intiskectapitasccnnnniciensnis 5

State ex rel. Chemtall Inc. v. Madden,

No. 33380, 2007 WL 4098937 (W. Va.

PU Sis BER nace cenaksoctadinchcunacatciadiasmatdbeviciaonadeahe 24

State ex rel. Mobil Corp. v. Gaughan,

563 S.E.2d 419 (W. Va.) (per curiam), cert.

rans, GET UTES BOG Ces csc sscescsnccccnenncnsancscnsas 27

TABLE OF AUTHORITIES—continued

Page(s)

State ex rel. Taylor v. Nibert,

CGE Te. TBE CWP. VO. DOOD) oncnnscccsecssnscssescreens 5-6

State Farm Mut. Auto. Ins. Co. v. Campbell,

Se i I I sack avchainsakencsnncncnsesinkdnbwoken passim

In re Tobacco Litig.,

624 S.E.2d 738 (W. Va. 2005)...............-..006 passim

United States v. Centennial Sav. Bank FSB,

ee SEED, ck prntanysadeusaccousniapnsenesanns 31

White v. Ford Motor Co.,

500 F.3d 963 (Sth Cir. 2007)................s0-0ce0e. 17, 32

CONSTITUTION AND STATUTES

a Ss, SAINI, TN oa cn ascendant scien ncetiatentnlcrain 23

ei, I MN FEI oo oiecs sacsdavnnscuckanadtentanenenss a

2B U.S.C. § 1257 (a) .cccccccceccescscesesceeveceseseeseeeesees ae 1

W. Va. Code § 53-L-] oeccccccccccccsssssceeeeseeseeeees esas 5

RULES

i Se ee: ee | PEERS re pao PSSA TOP 30

er oe a paukaemeaataniwsabiaddanebas 28

Ve, TT I nn cccvicccsensunnsoenes Roe 28

W. VA. R. CIV. P. 42(a)......... Recnsghaemiouare tl Sabena .. 5, 28

ee >, Sy SBR ronenrrne erry 6, 28

MISCELLANEOUS

TABLE OF AUTHORITIES—continued

Page(s)

Michael P. Addair, A Small Step Forward: An

Analysis of West Virginia’s Attempt At

Joint And Several Liability Reform, 109 W.

WR ea I TT Finbnkntad csshnaiiadatenrnacssicsascainses 25

Brian Dorsey, The Good, the Bad, and the

Ambiguous: Recent Developments in West

Virginia’s Class Action Jurisprudence, 107

Ws is ks Es Be OO is asnnersccdtensaeninidscccrsanss 25

Editorial, The Asbestos-Fraud Express, WALL

i ag MN Be, ls FR iin iscsi tcescseccconavvececss 25

Judicial Hellhole’ Label Not Unfair, THE IN-

TELLIGENCER WHEELING NEWS-REGISTER,

ee ns Oe tal tees canccceenianssvanicies 25

Petition for Writ of Certiorari, Daniel Meas-

urement Servs. v. Eagle Research Corp.,

No. 07-384, 2007 WL 2736284 (U.S. Sept.

re hers era) 5saa rian tabu deebunennaatonsvicpecetin 25_

Petition for Writ of Certiorari, Mobil Corp. v.

Adkins,

No. 02-132, 2002 WL 32134868

er I Os essay xn paecassecanendecebiesacnans 33

Petition for Writ of Certiorari, Union Carbide

Corp. v. Recht,

No. 03-319, 2003 WL 22428919 (U.S. Aug.

Ne ad oo aioe che sk, oa hen rae haeraamcanemios 24

PETITION FOR A WRIT OF CERTIORARI

Petitioners Philip Morris USA Inc., Brown &

Williamson Holdings, Inc., Lorillard Tobacco Com-

pany, and R.J. Reynolds Tobacco Company respect-

fully petition for a writ of certiorari to review the

judgment of the Supreme Court of Appeals of West

Virginia in this case.

JUDGMENTS BELOW

The order of the Supreme Court of Appeals of

West Virginia, App. la-2a, is unreported. The under-

lying order of the Circuit Court for Ohio County,

App. 3a-4a, is unreported. An earlier decision of the

Supreme Court of Appeals of West Virginia address-

ing issues that are the subject of this petition, App.

3la-65a, is reported at 624 S.E.2d 738.

JURISDICTION

The order of the Supreme Court of Appeals of

West Virginia denying petitioners’ petition for a writ

of prohibition was entered on November 7, 2007.

App. la-2a. This Court has jurisdiction to review

this decision under 28 U.S.C. § 1257(a). See Bd. of

Educ. v. Super. Ct., 448 U.S. 1343, 1345-46 (1980);

Madruga v. Super. Ct., 346 U.S. 556, 557 n.1 (1954)

(“The State Supreme Court’s judgment finally dis-

posing of the writ of prohibition is a final judgment

reviewable here under 28 U.S.C. § 1257.”).

CONSTITUTIONAL PROVISION INVOLVED

The Fourteenth Amendment to the United States

Constitution provides: “nor shall any state deprive

any person of life, liberty, or property, without due

process of law * * *.”

STATEMENT

The courts of West Virginia have adopted, and

employ with increasing frequency, an unconstitu-

tional approach to the adjudication of punitive-

damages claims in mass-tort litigation. In the deci-

sions below, the West Virginia courts have approved

a trial plan that consolidates more than 700 separate

personal-injury actions brought by individual smok-

ers. The plaintiffs’ product liability and fraudulent

concealment claims—similar to one another only in

that each plaintiff asserts an injury related to his or

her use of some tobacco product—will be tried in a

three-stage proceeding.

Phase I of this trial is scheduled to commence on

March 18, 2008. In that proceeding, the jury will de-

termine, based entirely on aggregate proof that is

untethered to the injuries or experiences of any in-

dividual plaintiff, certain elements of the compensa-

tory liability inquiry. This jury will also determine—

again without the benefit of evidence about any indi-

vidual plaintiff—whether each defendant’s conduct

merits punitive damages. If it answers this question

in the affirmative as to any defendant, the same jury

in Phase I(A) will determine a punitive damages

“multiplier” for that defendant. That determination,

too, will be based entirely on aggregate proof; the evi-

dence will bear no demonstrated nexus to the inju-

ries to any individual plaintiff, much less to those of

all plaintiffs.

In Phase II proceedings, different fact-finders

will determine whether each plaintiff has established

the remaining elements of his or her liability claims

and is entitled to compensatory damages. The Phase

I(A) multipler will then be used to fix the particular

dollar amount of punitive damages owed by each de-

fendant to each individual plaintiff.

The Phase I jury will thus be asked to determine

whether each defendant’s conduct warrants punish-

ment, and to set a single punitive-damages multi-

plier for each defendant that will be applied in every

follow-on case, based on a broad composite of the ac-

tions of four different defendants over the course of a

half century. It will do so without being told any-

thing at all about the persons who allegedly were

harmed by any aspect of that composite, what inju-

ries those persons suffered, or whether the defen-

dants are responsible for those injuries. Nor will the

jury know the total amount of compensatory dam-

ages the plaintiffs will eventually recover—or

whether that sum will be sufficient to accomplish the

State’s interest in punishment and deterrence. De-

fense counsel will be wholly unable to defend against

plaintiffs’ amorphous claim for punitive damages,

because individual discovery has been relegated to

Phase II: during Phase I, petitioners will not be able

to cross-examine individual plaintiffs or present

their affirmative defenses. And the Phase II juries

will apply the Phase I findings to the cases of all the

plaintiffs who can prove their claims for compensa-

tory liability and damages—regardless of whether

those individuals were harmed by the conduct that

formed the basis of the first jury’s imposition of puni-

tive liability and damages.

West Virginia’s approach to the determination of

punitive hability and punitive damages in mass-tort

litigation is foreclosed by this Court’s decisions in

State Farm Mutual Automobile Insurance Co. v.

Campbell, 538 U.S. 408 (2003) and Philip Morris

USA v. Williams, 127 S. Ct. 1057 (2007). In those

two cases, this Court held that, because the Due

Process Clause abhors the “arbitrary determination”

of punitive damages, the proceedings must ensure

that a jury has the information necessary to exercise

its powerful discretionary authority in a rational

way. Williams, 127 S. Ct. at 1062. The trial plan at

issue here—which the West Virginia Supreme Court

of Appeals described as a “common” feature of mass-

tort litigation in that State—ensures the opposite.

First, the Phase I jury will not know (i) whether

the conduct it has heard about actually harmed any

plaintiff; (ii) the severity of any injury that resulted;

(i1) which defendants—if any--are responsible for

that harm; or (iv) the total amount of compensatory

damages owed to the plaintiffs by any defendant.

Punishment imposed in this manner cannot possibly

be grounded in the facts of the actual suit before the

court, as due process requires; rather, it will inevita-

bly be based upon “the merits of other parties’ hypo-

thetical claims against a defendant.” State Farm, 538

U.S. at 423; see also Williams, 127 S. Ct. at 1063.

The punishment will thus reflect nothing more than

the jury’s view that a particular defendant is “an un-

savory individual or business” with substantial fi-

nancial resources—precisely the result that due

process forbids. State Farm, 538 U.S. at 422-23.

And because the Phase I jury will have no informa-

tion about the total amount of compensatory dam-

ages owed to the plaintiffs by any defendant, it can-

not possibly determine whether “the defendant’s cul-

pability, after having paid compensatory damages, is

so reprehensible as to warrant the imposition of fur-

ther sanctions.” State Farm, 538 U.S at 419 (empha-

sis added).

Second, the Phase I jury’s findings will subse-

quently be applied in the trials of all of the plaintiffs.

Accordingly, the plaintiffs who were not harmed by

the conduct that the Phase I jury found egregious

will still see their proven compensatory damages en-

hanced by a multiplier that is based on the defen-

dant’s conduct toward other parties—a clear viola-

tion of this Court’s “explicit” holding in Williams that

“a jury may not punish for the harm caused others.”

127 S. Ct. at 1065.

1. On September 28, 1999, the Chief Justice of

the Supreme Court of Appeals for West Virginia en-

tered an administrative order consolidating all to-

bacco-related personal injury suits then pending in

West Virginia—more than 120 at that time—and

transferring them to the Circuit Court of Ohio

County for coordinated proceedings.! The court did

not hold a class-certification hearing prior to aggre-

gating the suits. Nor were the suits consolidated

under W. Va R. Civ. P. 42(a), which would have re-

quired a determination that consolidation would

“promote judicial economy and convenience of the

parties, and avoid prejudice and confusion.” State ex

rel. Appalachian Power Co. v. Ranson, 438 S.E.2d

609, 610, Syl. Pt. 2 (W. Va. 1993) (emphasis added).?

| The Circuit Court of Ohio County is a trial court. West Vir-

ginia has no intermediate appellate courts. A decision of a Cir-

cuit Court may be reviewed by West Virginia’s highest court,

the Supreme Court of Appeals, on direct appeal. Alternatively,

as in this case, a party may petition for a writ of prohibition “to

restrain inferior courts from proceeding in causes over which

they have no jurisdiction, or, in which, having jurisdiction, they

are exceeding their legitimate powers.” Crawford v. Taylor, 75

S.E.2d 370, Syl. Pt. 1 (W. Va. 1953); W. Va. Code § 53-1-1.

2 Cf. State ex rel. Taylor v. Nibert, 640 S.E.2d 192, 197 (W. Va.

2006) (granting extraordinary writ to reverse trial court order

Rather, these initial 120 claims were consolidated

under West Virginia’s special mass-tort procedure,

Trial Court Rule 26.01, which allows consolidation

on the basis of a showing that there are some “com-

mon issues of law or fact” and that consolidation will

lead to an “expeditious” resolution of the claims.

More than 1,000 additional] plaintiffs soon joined

the consolidated proceeding. Their individual suits

allege 24 different kinds of injuries, including vari-

ous types of cancer; cardiovascular and coronary dis-

ease; periphera] vascular disease; and chronic ob-

structive pulmonary disease. Moreover, the com-

plaints propose widely varying theories of liability,

including strict liability, megligence, breach of ex-

press warranty, fraudulent concealment, and civil

conspiracy. Plaintiffs allege that they used more

than 200 different tobacco products—including many

that were not even cigarettes—beginning at different

points in time, and lasting for different durations.

Thus, plaintiffs themselves claim that they were af-

fected in dramatically different ways by dramatically

different aspects of defendants’ alleged conduct.

2. On January 11, 2000, the trial court issued a

case management order. Over petitioners’ objections,

the trial court adopted the trial plan proposed by

plaintiffs’ counsel. This plan provided that “[a]ll per-

sonal injury tobacco cases for plaintiffs now pending,

filed in, or transferred to and accepted by this

Court * * * shall be included in a single consolidated

trial in Ohio County ***.” App. 69a (Trial Plan §

1). The plan further ordered that a consolidated trial

of hundreds of separate claims would be bifurcated

consolidating plaintiffs’ claims; the claims did not arise out of

the same “transaction or occurrence” merely because the plain-

tiffs received the same deficient mailing from the defendant).

into multiple phases. In Phase I—without any con-

sideration of any evidence concerning any actual

plaintiff—the jury will first determine “general li-

ability issues,” including whether each defendant

could be held liable on a theory of fraudulent con-

cealment, negligence, product defect, or warranty.

The Phase I jury will also determine “entitlement to

punitive damages” and a multiplier, to be uniformly

applicable to all successful plaintiffs regardless of the

specifics of their claims. In Phase II, “issues unique

to each plaintiffs” claim for compensatory damages

will be tried before different fact-finders. App. 69a-

70a (Trial Plan { 3).

As the trial court’s subsequent decisions have

confirmed, no individual plaintiffs claims will be

tried in Phase I. Almost no plaintiff-specific discov-

ery has been permitted, and the Phase I jury will not

be permitted to hear evidence concerning any par-

ticular plaintiffs case. That jury will not hear evi-

dence or make findings, for example, regarding the

reasons why any individual plaintiff began smoking,

when and for how long he or she smoked, which de- _

fendant’s cigarette brands (or other tobacco products)

he or she used, whether any defendant influenced his

or her smoking decisions, or what he or she under-

stood about the health risks of smoking. The Trial

Plan relegates any plaintiff-specific inquiry to Phase

II—after the decision on punishment has already

been rendered, and the one-size-fits-all multiplier

conclusively established. App. 70a, 74a (Trial Plan

77 3, 6G).

3. After this Court decided State Farm in 2003,

petitioners asked the trial court to re-evaluate the

constitutionality of the trial plan. The court vacated

the plan on June 16, 2004 on the ground that asking

the jury to assess punitive damages in Phase I would

violate defendants’ due process rights. As the court

explained:

This Court has read and reread Campbell in

an effort to determine whether there is any

conceivable manner to salvage the extant

Case Management Order and still accommo-

date the due process demands of Campbell to

require any punitive damage award to pun-

ish and deter conduct that has a specific rela-

tionship to a specific injured party. It cannot

be done.

App. 66a.

4. At respondents’ request, the trial court subse-

quently agreed to certify the following question to

the West Virginia Supreme Court of Appeals:

Does the Due Process Clause of the Four-

teenth Amendment to the Federal Constitu-

tion, as interpreted by State Farm v. Camp-

bell, preclude a bifurcated Trial Plan in a

consolidated action consisting of personal in-

jury claims of approximately 1,000 individual

smokers, wherein Phasc I of the trial would

decide certain elements of liability and a pu-

nitive damages multiplier and Phase II of the

trial would decide for each plaintiff compen-

satory damages and punitive damages based

upon the punitive damages multiplier deter-

mined in Phase I?

App. 43a.

West Virginia’s high court answered the certified

question in the negative, holding that it could find

“nothing in [State Farm] that per se precludes a bi-

furcated trial plan in which a punitive damages mul-

tiplier is established prior to the determination of in-

dividual compensatory damages.” In re Tobacco

Litig., 624 S.E.2d at 741. Reading State Farm as a

narrow decision, based on “extreme” facts (id. at

742), the court rejected the trial court’s contrary con-

clusion that State Farm requires an “analysis of the

defendant’s conduct vis-a-vis a specific plaintiff’ and

thus “requires that the defendant’s conduct be tai-

lored to each plaintiff.” Jbid. In any event, in the

Supreme Court of Appeals’ view, post-verdict exces-

siveness review by the trial court could cure any con-

stitutional error associated with the structure of the

proceedings. Id. at 743.

5. On remand, the trial court had this to say

about the high court’s interpretation of State Farm:

“T still don’t think I was wrong * * * when I got the’

opinion from the West Virginia Supreme Court, quite

frankly, I just went back, and I said they don’t want

to really hear it. * * * Now, I’m not saying they have

answered the particular conundrum, maybe, that we

have. I don’t think that.” 12/14/2006 Hearing Tr. at

27-28. Nevertheless, over petitioners’ objections, the

circuit court reinstated the original trial plan. See

4/3/2006 Hearing Tr. at 13-15, 36, 38. Despite the

court’s continuing concerns that the trial plan would

not pass muster under State Farm, it made clear

that it would not attempt to ensure that Phase I

would be limited to purported common issues and

common evidence. 12/14/2006 Hearing Tr. at 29. As

a result, as respondents’ counsel has conceded, “some

of the issues that we will try surely will not apply to

everyone. Maybe some of them won't apply to any-

one***.” 9/18/2007 Hearing Tr. at 33 (emphasis

added).

6. On February 20, 2007, this Court issued its

decision in Philip Morris USA v. Williams. Petition-

ers again moved to vacate the trial plan, arguing

that Williams—which held “explicitly that a jury

may not punish for the harm caused others” and af-

firmatively requires States to “protect against [the]

risk” that juries will seek to punish the defendant for

having caused “harm to others,” 127 S. Ct. at 1063,

1065—made the unconstitutionality of West Vir-

ginia’s trial plan even more plain than had State

Farm. The trial court denied petitioners’ motion on

May 23, 2007, App. 24a, and, on August 17, 2007, re-

affirmed its decision to go forward with the bifur-

cated trial plan, App. 12a-14a.

7. Petitioners then filed a petition for a writ of

prohibition in the Supreme Court of Appeals of West

Virginia, seeking to bar the trial court from “having

one jury determine a single uniform punishment (a

punitive damages multiplier) for all Plaintiffs first,

and having other juries determine lability, defenses,

and compensatory damages for individual plaintiffs

later.” Writ Petition at 1. Citing State Farm and

Williams, petitioners explained that this trial plan

would violate their due process rights by allowing

the jury to impose punishment before petitioners’ li-

ability to any claimant had been established and the

extent of the compensatory damages fixed. Addi-

tionally, petitioners argued that under Williams, a

single punitive damages multiplier could not be ap-

plied to every case because plaintiffs claim to have

been injured in different ways and by different as-

pects of the defendants’ conduct. As petitioners ex-

plained:

evidence in support of claims of concealment

or failure to warn of the risks of smoking

cannot be the basis of punitive damages for

those Plaintiffs aware either of the risks of

smoking or of the facts supposedly concealed.

Evidence of the so-called “Frank Statement”

[an advertisement published in 1954] * * *

cannot be the basis of punitive damages for

Plaintiffs who never saw it—indeed, were not

even born or could not yet read when the ad-

vertisement was published. Evidence of

other cigarette advertisements cannot be the

basis of punitive damages for Plaintiffs who

never saw or heeded them. * * * The list goes

on and on.

Writ petition at 12-13 (footnotes omitted).

Given the disparate nature of the plaintiffs’

claims, and the aggregated evidence that will be ad-

mitted in Phase I, petitioners also argued that there

would be no way to ensure that the Phase I jury’s

findings would bear the constitutionally-mandated

nexus to the harm done to each plaintiff who would

receive punitive damages based on those findings.

The West Virginia Supreme Court of Appeals denied

the petition without comment in an order dated No-

vember 7, 2007, over the dissent of one justice of the

court. App. la-2a.

REASONS FOR GRANTING THE PETITION

West Virginia’s approach to adjudicating mass-

tort cases is deeply and fundamentally flawed.

3 The “Frank Statement” was a “full-page advertisement signed

by the four defendant cigarette manufacturers that was pub-

lished in the 448 American newspapers serving cities with

populations of more than 25,000 people.” Jnsolia v. Philip Mor

ris Inc., 216 F.3d 596, 602 (7th Cir. 2000)

Driven by the apparent desire to clear the state’s

dockets of pending claims, West Virginia’s high court

has adopted a “system of mass tort litigation” (see Jn

re Tobacco Litig., 624 S.E.2d 738, 741 (W. Va. 2005))

that is patently unconstitutional. Under this “sys-

tem,” disparate claims are consolidated and then

tried in a reverse-bifurcated structure that requires

the jury to assess punishment before the defendant's

liability to any plaintiff has been established. This

approach to the adjudication of mass-tort cases can-

not be reconciled with this Court’s punitive-damages

jurisprudence, both because it requires the jury to

impose punishment without the information it would

need to exercise its discretion in a rational way, and

because due process does not permit the application

of a one-size-fits-all multiplier to plaintiffs who claim

to have been injured in various ways, to varying ex-

tents, and by varying conduct. It is also at odds with

the decisions of other courts. Despite the clear con-

stitutional infirmities of this model, West Virginia

employs it with increasing frequency. And because

most of the defendants subjected to it are quickly

forced to settle, opportunities for this Court to inter-

vene are—and will continue to be—rare. This Court

should grant certiorari now to bring West Virginia’s

mass-tort litigation system into compliance with con-

stitutional standards.

I. WEST VIRGINIA’S APPROACH TO

ASSESSING PUNITIVE DAMAGES

VIOLATES DUE PROCESS.

A. West Virginia’s Approach Cannot Be

Reconciled With State Farm And

Williams.

West Virginia’s approach to assessing punitive

damages in mass-tort cases is incompatible with this

Court’s punitive damages decisions, particularly

State Farm and Williams. Those decisions have em-

phasized that (i) punishment must be narrowly fo-

cused on the defendant’s conduct toward the plaia-

tiff, Williams, 127 S. Ct. at 1065; State Farm, 538

U.S. at 423; (ii) punishment may be imposed only af-

ter a defendant has had a full “opportunity to defend

against the charge,” Williams, 127 S. Ct. at 1063;

and (iii) punishment should be imposed only when

the plaintiffs proven compensatory damages are in-

sufficient to serve the state’s objectives of deterrence

and punishment. State Farm, 538 U.S. at 419.

A trial court has an affirmative obligation to pro-

tect against “an unreasonable and unnecessary risk”

that a defendant will be punished for harms to par-

ties other than the plaintiff, or for conduct other than

that which harmed the plaintiff. Williams, 127 S. Ct.

at 1065; see also State Farm, 538 U.S. at 422-23.

The trial plan here does not merely fail to protect

against such a risk—it guarantees that it will mate-

rialize.

1. The Phase I Jury’s Findings Will Not

Bear A Sufficient Nexus To The Conduct

That Harmed Any Particular Plaintiff.

1. The question before the jury in Phase I will be

whether each defendant engaged in conduct that

warrants an award of punitive damages—which, un-

der West Virginia law, means a “wrongful act” that

was undertaken “maliciously, wantonly, mischie-

vously or with criminal indifference to civil obliga-

tions.” Gen. Motors Acceptance Corp. v. D.C. Wrecker

Serv., 647 S.E.2d 861, 867 (W. Va. 2007). In State

Farm, this Court made clear that any such finding

must rest on the conduct that harmed the plaintiff be-

fore the court.

A defendant’s dissimilar acts, independent

from the acts upon which liability was prem-

ised, may not serve as the basis for punitive

damages. A defendant should be punished

for the conduct that harmed the plaintiff, not

for being an unsavory individual or busi-

ness.*** The reprehensibility guidepost

does not permit courts to expand the scope of

the case so that a defendant may be punished

for any malfeasance, which in this case ex-

tended for a 20-year period.

538 U.S. at 422-24 (emphasis added). See also id. at

422 (to be relevant to the punitive damages inquiry,

defendant’s “conduct must have a nexus to the spe-

cific harm suffered by the plaintiff’).

In this case, it will be impossible for the Phase I

jury to evaluate each defendant's conduct toward the

plaintiff before the court—because that jury will

know nothing about any of the plaintiffs in this con-

solidated action. The trial court has made clear that

the Phase I jury will not be given any information

about even a single plaintiff. The Phase I jury will

thus be left to hear only a generalized, aggregated

presentation about petitioners’ conduct over half a

century.

The suits consolidated in this case present a pas-

tiche of widely varying claims brought by a broad ar-

ray of West Virginia smokers. Some respondents

started smoking before World War II, many others in

the 1950s and 1960s, and others as late as the 1980s.

Some smoked only “regular” cigarettes, while others

smoked only “light” cigarettes; and others stil!

smoked both. Some claim to have started smoking

while young, others only after they reached adult-

hood. Some plaintiffs claim that they were addicted

to cigarettes, and others deny that they were unable

to stop. Some plaintiffs claim that smoking caused

them to develop cancer; others claim that it caused

them to develop tooth decay. And the list goes on.

Because of these disparities, plaintiffs assert—and

the trial court has agreed—that they must present

evidence covering a half-century of defendants’ con-

duct in order to address the facts that are alleged to

have injured each of the hundreds of plaintiffs before

the court. But as respondents also belatedly concede,

“some of the issues that we will try surely will not

apply to everyone. Maybe some of them won’t apply

to anyone ** *.” Sept. 18, 2007 Hearing Tr. at 33

(emphasis added).

Thus, any finding that one or more of petitioners

engaged in conduct giving rise to liability for puni-

tive damages wiil necessarily rest on a retrospective

view of petitioners’ conduct over a fifty-year period,

not on the conduct that harmed any individual. This

procedure clearly raises a risk that the court will ul-

timately “award[] punitive damages to punish and

deter conduct that bore no relation to the [plaintiffs’]

harm,” State Farm, 538 U.S. at 422, because neither

the defendants nor court nor the jury will have any

way of identifying the “acts upon which liability is

premised.” Jd. at 422. It is difficult to imagine a

trial plan that would more effectively guarantee that

any verdict in plaintiffs’ favor will reflect nothing

more than the jury’s view that a particular defendant

is “an unsavory individual or business.” Id. at 423.

This is precisely what the Due Process Clause for-

bids.

The trial plan also precludes petitioners from de-

fending themselves against plaintiffs’ punitive dam-

ages claims. As in many West Virginia mass-tort

cases, the trial plan bars “[d]iscovery relevant to

Phase II issues” until “after [the Phase I] consolli-

dated trial of the common issues.” App. 74a (Trial

Plan 96) (emphasis added). Nor will defendants be

able to cross-examine any individual plaintiffs or

raise any affirmative defenses during Phase I. Thus,

neither defendants nor the Phase I jury will have

any idea, for example, how many of the plaintiffs

“knew that smoking was dangerous or did not rely

upon the defendant’s statements to the contrary.”

Williams, 127 S. Ct. at 1063. This curtailment of de-

fendants’ opportunity to oppose plaintiffs’ claims is a

due process violation in and of itself. Ibid. (“the Due

Process Clause prohibits a State from punishing an

individual without first providing that individual

with ‘an opportunity to present every available de-

fense.”’) (emphasis added).

2. The jury’s determination of a punitive-

damages multiplier in Phase I(A) will, like the Phase

I verdict, rest on an evidentiary showing that will be

at once overbroad and incomplete. The jury neces-

sarily will be speculating about the number of vic-

tims that were actually harmed by each defendant;

the extent of their injuries; the extent to which those

injuries were actually caused by the defendant’s al-

leged wrongful conduct (as opposed to the risks in-

herent in smoking cigarettes); and the nature of the

particular wrongful conduct that harmed each plain-

tiff. All of those factors are key to a proper assess-

ment of the relative reprehensibility of a defendant's

conduct—“the most important indicium of the rea-

sonableness of a punitive damages award.” BMW of

N. Am. Inc., v. Gore, 517 U.S. 559, 575 (U.S. 1996).

As this Court explained in State Farm, “[d]ue process

does not permit courts, in the calculation of punitive

damages, to adjudicate the merits of other parties’

hypothetical claims against a defendant under the

guise of the reprehensibility analysis * * *.” 538 U.S.

at 423. Here, the jurors will be considering solely

“the merits of other parties’ hypothetical claims,” be-

cause they will know nothing at all about the claims

of the actual plaintiffs.

In State Farm, moreover, this Court explained

that where the defendant’s compensatory liability is

large, the imposition of any award of punitive dam-

ages may be unwarranted and unconstitutional. “It

should be presumed that a plaintiff has been made

whole for his injuries by compensatory damages, so

punitive damages should only be awarded if the de-

fendant’s culpability * * * is so reprehensible as to

warrant the imposition of further sanctions to

achieve punishment or deterrence.” 538 U.S. at 419.

The Phase I jury, of course, will have no way to

know, or even guess, the amount of compensatory

damages that will ultimately be paid to the plain-

tiffs. Accordingly, it will be impossible for that jury

to determine whether, and to what extent, additional

Sanctions are necessary or appropriate. Cf. White v.

Ford Motor Co., 500 F.3d 963, 974 (9th Cir. 2007)

(holding that Nevada law required a jury hearing a

punitive-damages retrial to be told the amount of

compensatory damages that the first jury had

awarded: “Without knowing the amount of those

damages, the punitive damages jury could not have

come to a reasoned conclusion as to the amount of

additional damages necessary to deter Ford from

similar conduct in the future.”).

2. The Application Of A Uniform Multiplier

To Disparately-Situated Plaintiffs Vio-

lates Due Process.

This Court’s decisions do not countenance the

application of a one-size-fits-all multiplier to plain-

tiffs allegedly harmed by different aspects of peti-

tioners’ past conduct. Williams, 127 S. Ct. at 1065

(holding “explicitly that a jury may not punish for

the harm caused others”); State Farm, 538 U.S. at

425 (“[t]he precise [punitive] award in any case, of

course, must be based upon the facts and circum-

stances of the defendant’s conduct and the harm to

the plaintiff’). In this case, the vast disparities

among respondents’ claims will make it impossible to

ensure in each Phase II trial that the relevant defen-

dant is being punished because, and to the extent

that, the Phase I jury found the defendant’s conduct

toward this particular plaintiff to be reprehensible.

For example, imagine that the jury found that

petitioners’ allegedly misleading statements to the

public about the health effects of “light” cigarettes

merited the imposition of punishment and a particu-

lar punitive damages multiplier. The across-the-

board application of that multiplier would result in

the imposition of punitive damages on behalf of re-

spondents who never smoked “light” cigarettes—the

vast majority of them-—and therefore could not have

been harmed by that conduct. The same would be

true if the multiplier were based in part on the peti-

tioners’ use of particular advertisements: under Wil-

liams, that conduct could not lawfully be the basis

for awarding punitive damages to respondents who

never viewed those ads. Likewise, evidence of al-

leged marketing to youth cannot lawfully form the

basis for awards of punitive damages to plaintiffs

who started smoking as adults.

Imposing a rigid multiplier before compensatory

damages are ascertained also violates due process by

ignoring that the constitutionally permissible rela-

tionship between punitive and compensatory dam-

ages varies with the actual size of the compensatory

award. This Court has held that, in most cases, the

maximum allowable penalty will run from zero to

nine times the amount of compensatory damages.

State Farm, 538 U.S. at 423-25. Because compensa-

tory damages serve a deterrent purpose, the size of

the compensatory award is (along with the reprehen-

sibility of the defendant’s conduct toward the plain-

tiff} a key factor in gauging the maximum constitu-

tionally permissible ratio of punitive to compensa-

tory damages: in most cases, the maximum ratio will

be inversely proportional to the size of the compensa-

tory award. Indeed, “[w]hen compensatory damages

are substantial, then a lesser ratio, perhaps only

equal to compensatory damages, can reach the out-

ermost limit of the due process guarantee.” Jd. at

425. In contrast, more extreme punitive damages

multiples are reserved for cases in which “a particu-

larly egregious act has resulted in only a small

amount of economic damages.” Jbid. (quoting BMW,

517 U.S. at 582). Here, however, the ratio will be de-

termined in advance, without any knowledge of the

size of the compensatory damages.

Thus, when a uniform punitive damages multi-

plier is determined before a finding of compensatory

damages, it guarantees an unconstitutional result.

That procedure deprives the jury and the reviewing

court of the ability to make the contextual, individu-

alized decision about the size of a punitive damages

award that due process requires. See, e.g., Philip

Morris Inc. v. Angeletti, 752 A.2d 200, 249 (Md. 2000)

(“Mere widespread, identical proportionality between

actual damages and punitive damages for such a

multitude of plaintiffs would not necessarily encap-

sulate the relation between the two types of damages

deemed requisite under this State’s common law,”

which applies functionally the same analysis as fed-

eral constitutional law).

B. The Decision Below Conflicts With

Rulings Of The Second Circuit And

Other Courts.

The decisions in this case directly conflict with

the Second Circuit’s decision in In re Simon II Litiga-

tion, 407 F.3d 125 (2d Cir. 2005). In that case, the

court of appeals rejected a trial plan that called for

the litigation of punitive liability and punitive dam-

ages prior to any determination of compensatory li-

ability or compensatory damages to individual plain-

tiffs. The court observed that under State Farm,

“punishment on any basis that does not have a nexus

to the specific harm suffered by the plaintiff’ is un-

constitutional. Jd. at 139. The district court’s trial

plan, under which the jury would have estimated to-

tal harm to the class and then imposed an aggregate

award of punitive damages, raised the risk of such

punishment because it failed to account for the dif-

ferences among plaintiffs. Jd. at 138.

The Fifth Circuit, too—even before State Farm—

held that, in a case like this one, punitive damages

cannot be litigated prior to a determination of com-

pensatory liability and damages. Because considera-

tion of “punitive damages requires individualized

proof and determinations,” “punitive damages must

be determined after proof of liability to individual

plaintiffs at the second stage of a [Title VII] pattern

or practice case, not upon the mere finding of general

liability to the class at the first stage.” Allison v.

Citgo Petroleum Corp., 151 F.3d 402, 418 (5th Cir.

1998). See also Colindres v. QuietFlex Mfg., 235

F.R.D. 347, 377 (S.D. Tex. 2006) (“[P]Junitive dam-

ages cannot be assessed without proof of liability to

individual class members.”) (citing Allison).

Similarly, the Court of Appeals of Maryland

firmly rejected a trial plan similar to that at issue

here—albeit on state law grounds. Maryland’s high

court explained that the plan would

not enable the jury to properly assess the

amount of punitive damages that are appro-

priate in specific relation to differing

amounts of—and reasons for—actual dam-

ages. ** * Under the Circuit Court’s deci-

sion * ** the punitive damages determina-

tion would be made before any finding of li-

ability to any class member, in the absence of

any evidence that defendants’ conduct actu-

ally caused any class member’s alleged in-

jury, and without any knowledge of how

much, if any, compensatory damages would

be awarded to any class member by other ju-

ries who would never hear the Phase I evi-

dence.

Angeletti, 752 A.2d 200 at 249 (anternal quotation

marks omitted). See also id. at 245 (noting that the

trial plan called for a punitive-damages multiplier to

be used).

The Florida Supreme Court also recently con-

cluded that a punitive damages phase cannot be con-

ducted prior to the resolution of questions pertaining

to the defendant’s liability to the plaintiff. It there-

fore vacated a massive punitive damages award er-

roneously imposed by a Phase I jury. See Engle v.

Liggett Group, Inc., 945 So. 2d 1246 (Fla. 2006) (per

curiam), cert. denied, 128 S. Ct. 96 (2007). Though

petitioners firmly belicve that aspects of the Engle

decision were fundamentally erroneous, the Florida

Supreme Court clearly and correctly rejected the

view that a class-wide punitive damages phase may

be conducted before the defendant’s compensatory li-

ability to any plaintiff has been established. The

Florida high court found that this trial plan violated

both state law and principles of federal due process,

writing that “[i]t was error for the trial court to allow

the jury to consider entitlement to punitive damages

before the jury found that the plaintiffs had estab-

lished causation and reliance.” 945 So. 2d at 1263.

Moreover, “without having total compensatory dam-

ages determined it would be impossible to determine

whether punitive damages bear a ‘reasonable’ rela-

tionship to the actual harm inflicted on the plaintiff.”

Id. at 1265 (internal quotation marks omitted).

Several federal district courts have likewise held,

especially post-State Farm, that an assessment of

punitive damages must be tailored to each individual

plaintiffs injury, and thus cannot precede a determi-

nation of compensatory liability and damages. In Jn

re Baycol Products Litigation, 218 F.R.D. 197 (D.

Minn. 2003), a mass-tort case against a pharmaceu-

tical company, the district court rejected a class ac-

tion trial plan that was, in relevant respects, func-

tionally identical to the plan approved below, holding

that such a structure would violate due process:

To succeed on a punitive damages claim, a

plaintiff must prove that the defendant's con-

duct toward him/her rises to the level re-

quired by law. * * * [A] determination of pu-

nitive damages is based on individual is-

sues. * * * Plaintiffs’ proposed class trial on

punitive damages poses * * * due process con-

cerns because the conduct upon which Plain-

tiffs would base their punitive damages claim

is not specific to a particular plaintiff[]s

claim.”

Id. at 215.4

West Virginia’s “common” and unconstitutional

approach to the litigation of punitive damages claims

in mass-tort cases is in conflict with the decisions of

this Court and with the rulings of other courts. This

Court's immediate review is warranted.

4 Accord Nelson v. Wal-Mart Stores, Inc., 245 F.R.D. 358, 378

(E.D. Ark. 2007) (punitive damages could not be determined on

a classwide basis prior to individualized assessments of harm

and compensatory damages: “Individualized determinations are

necessary to fully realize the extent of the harm caused by Wal-

Mart’s conduct and properly assess the need for punishment

and deterrence”); O’Neal v. Wackenhut Servs., Inc., No. 3:03-

CV-397, 2006 WL 1469348 at *22 (E.D. Tenn. May 25, 2006)

(pursuant to State Farm, “a determination of punitive damages

would require each plaintiff to demonstrate how the discrimina-

tion affected him or her individually. As defendant points out,

proof of damages must be related to the harm to the plaintiff.

Te hold otherwise would violate defendant's rights to due proc-

ess and would improperly eliminate the jury’s discretion to as-

sess punitive damages under the Seventh Amendment’).

Il. THIS COURT SHOULD GRANT REVIEW IN

ORDER TO HALT WEST VIRGINIA’S RE-

PEATED AND UNCONSTITUTIONAL USE

OF REVERSE BIFURCATION TO RESOLVE

AGGREGATED PUNITIVE-DAMAGES

CLAIMS IN MASS-TORT LITIGATION.

A. The West Virginia Supreme Court Of

Appeals Has Made Clear That It Will

Continue To Place Expediency Over

Concerns Of Due Process In Mass-Tort

Litigation.

West Virginia’s use of its upside-down procedure

in this case is no one-time event. On the contrary, as

the West Virginia Supreme Court of Appeals itself

has explained, “bifurcated trial plans structured like

the one at issue [in this case] are common in West

Virginia.” In re Tobacco Litig., 624 S.E.2d at 742

(emphasis added). The reported cases confirm that

in recent years, the West Virginia courts have turned

to the aggregation and front-loading of punitive-

damages claims as a means of streamlining mass-

tort litigation.5 This approach to assessing punitive

5 See, e.g., State ex rel. Chemtall Inc. v. Madden, No. 33380,

2007 WL 4098937 (W. Va. Nov. 15, 2007) (per curiam) (approv-

ing a similar multi-phase trial plan to govern a consolidated ac-

tion: “(t]he first phase of the trial will involve liability and

whether the Defendants’ actions and/or inactions justify puni-

tive damages, and if so, what multiple of general damages will

be assessed as a punitive damage multiplier as to each Defen-

dant * * *. Should Plaintiffs prevail on the issue of liability, the

parties will proceed in the second phase to try the issues of

medical causation, medical monitoring viability, and damages.”)

(internal quotation marks omitted); Petition for Writ of Certio-

rari at 5, 10, Union Carbide Corp. v. Recht, No. 03-319, 2003

WL 22428919 (U.S. Aug. 22, 2003) (detailing that under the

trial plan, “punitive damages were assessed by the Phase |

damages awards is just one in a laundry list of rea-

sons why the West Virginia courts have earned wide-

spread criticism for their treatment of corporate de-

fendants.®

This Court should grant certiorari in order to

make express what already should be clear from its

decisions in State Farm and Williams—the “com-

mon” trial procedure employed in this case does not

comport with the requirements of the Due Process

Clause. West Virginia has stated quite clearly that

it will not amend its “existing system of mass tort

litigation” until it receives a “clear indication” from

this Court that it must. Jn re Tobacco Litig., 624

S.E.2d at 741-42. And the decisions below demon-

strate that its courts do not view the facial incom-

patibility of its current procedures with the teach-

ings of this Court in State Farm and Williams as suf-

ficient for that purpose.

In fact, members of West Virginia’s high court

appear inclined to work around, restate, or simply

ignore this Court’s ruling in State Farm: “As the

jury,” with “thousands” of individual liability trials scheduled to

follow); State ex rel. Appalachian Power Co. v. MacQueen, 479

S.E.2d 300, 304-05 & n.9 (W. Va. 1996) (calling for similarly bi-

furcated plan).

6 See, e.g., Michael P. Addair, A Small Step Forward: An

Analysis of West Virginia’s Attempt At Joint And Several Liabil-

ity Reform, 109 W. Va. L. REV. 831, 833 n.9 (2007); Brian Dor

sey, The Good, the Bad, and the Ambiguous: Recent Develop-

ments in West Virginia’s Class Action Jurisprudence, 107 W.

VA. L. REV. 261, 262 n.1 (2004) (citing Judicial Hellhole’ Label

Not Unfair, THE INTELLIGENCER WHEELING NEWS-REGISTER,

Nov. 9, 2003, at C4); Editorial, The Asbestos-Fraud Express,

WALL ST. J., June 2, 2006, at Al8; Petition for Writ of Certiorari

at 15, Daniel Measurement Servs. v. Eagle Research Corp., No.

07-384, 2007 WL 2736284, (U.S. Sept. 19, 2007).

members of this Court have noted before, State Farm

v. Campbell * * * was nothing more than a summary,

a collation, of prior case law.” In re Tobacco Litig.,

624 S.E.2d at 749 (Starcher, J., concurring) (citing

cases). See also, e.g., Jackson v. State Farm Mut.

Auto. Ins. Co., 600 S.E.2d 346, 367 (W. Va. 2004)

(McGraw, J., concurring) (opining that in State

Farm, “the majority of the nine justices did not focus

on ‘the degree of reprehensibility of the defendant's

conduct,’ but instead chose to substitute the jury’s

judgment with their own. * * * It is not ours to judge

whether the high Court did the right thing in reduc-

ing the 145 million dollar award in Campbell, but it

is vital that we not be blinded by the sheer size of an

award when considering its validity.”) (citation omit-

ted).? See also id. at 654 (Maynard, C.J., concurring

in part and dissenting in part) (“I fervently hope that

the next time a punitive damages award is reviewed

by this Court, the majority will abide by the United

States Supreme Court's decision in Campbell, even if

it does not like or agree with Campbell's holdings.

The rule of law demands that ordinary citizens follow

laws with which they do not agree. Likewise, we as

judges are bound by controlling legal precedent.

Campbell is the law of the land, and it must be ap-

? See also Boyd v. Goffoli, 608 S.E.2d 169, 188 (W. Va. 2004)

(Starcher, J., concurring) (“[W]hen examined objectively, [State

Farm] was not a significant decision by the U.S. Supreme

Court.”); Kocher v. Oxford Life Ins. Co., 602 S.E.2d 499, 505-06

(W. Va. 2004) (per curiam) (McGraw, J., dissenting) (stating

that the State Farm majority “foolishly” had “adopted this overt

fear of large numbers” and that “[t)he majority opinion deserves

credit for not openly embracing the seductively simple argu-

ments of Campbell and Gore, but I fear some of that logic has

affected the decision to reverse this case.”).

plied everywhere in the United States, including in

West Virginia.”).

It is not a stretch to suggest that in managing

mass-tort cases the West Virginia courts have privi-

leged “flexibility” (see State ex rel. Mobil Corp. v.

Gaughan, 563 S.E.2d 419, 424 (W. Va.) (per curiam),

cert. denied, 537 U.S. 944 (2002)) above due process.

In the words of one justice of the West Virginia Su-

preme Court of Appeals, “what process is due is en-

tirely dependent upon the trial judge’s discretion.” In

re Tobacco Litig., 624 S.E.2d at 744 (Starcher, J.,

concurring) (emphasis added). This view that the

Due Process Clause places no meaningful limitations

on how courts may conduct mass-tort litigation pro-

ceedings is totally at odds with settled constitutional

principles. As many other courts have recognized,

the requirements of the Due Process Clause cannot

be set aside simply because plaintiffs have filed nu-

merous cases in one jurisdiction. On the contrary, it

is precisely these “considerations of convenience and

economy [which] must yield to a paramount concern

for a fair and impartial trial.” In re Repetitive Stress

Injury Litig., 11 F.3d 368, 373 (2d Cir. 1993) (quoting

Johnson v. Celotex Cornv., 899 F.2d 1281, 1285 (2d

Cir. 1990)).

Accordingly, courts outside West Virginia have

recognized that “(t]he systematic urge to aggregate

litigation must not be allowed to trump our dedica-

tion to individual justice, and we must take care that

each individual plaintiffs—and defendant’s—cause

not be lost in the shadow of a towering mass litiga-

tion.” In re Brooklyn Navy Yard Asbestos Litig., 971

F.2d 831, 853 (2d Cir. 1992). See also In re Ethyl

Corp., 975 S.W.2d 606, 613 (Tex. 1998) (quoting

same); Cain v. Armstrong World Indus., 785 F. Supp.

1448, 1456-57 (S.D. Ala. 1992) (“The congestion these

[asbestos] cases caused in this district for all civil

litigants gives one a skewed view of how to resolve

the problem. The ‘“Try-as-many-as-you-can-at-one-

time’ approach is great if they all, or most, settle; but

when they don’t, and they didn’t here, [plaintiffs get]

a chance to do something not many other civil hti-

gants can do—overwhelm a Jury with evidence.”).

Indeed, here, as in many other mass-tort cases,

West Virginia’s courts have aggregates hundreds of

disparate cases without attempting to satisfy the

standards for certification of a class artion. Among

those standards is the requirement thai, common is-

sues must predominate over individual ones. W. Va.

R. Civ. P. 23(b). The West Virginia courts have also

exempted mass-tort cases from even the typical

claims consolidation analysis under W. Va. R. Civ. P.

42(a), which requires (inter alia) a showing that con-

siderations of judicial economy outweigh the poten-

tial prejudice and confusion.§

Instead, the West Virginia Supreme Court of Ap-

peals may order mass-tort cases consolidated pursu-

ant to W. Va. Tr. Ct. R. 26.01, under which the con-

solidation inquiry is exempt from “case law * ** ad-

dress[ing] issues of joinder, class action, and consoli-

dation.” State ex rel. Allman v. MacQueen, 551

S.E.2d 369, 374 (W. Va. 2001) (per curiam). Rule

26.01 consolidation is governed by no standard in-

8 Smoking-and-health claims cannot be consolidated under Fed.

R. Civ. P. 42(a). See, e.g., Clinton v. Brown & Williamson Hold-

ings, Inc., Nos. 05 Cv. 9907, 05 Cv. 9908, 05 Cv. 9174 (CB),

2007 WL 2161778 (S.D.N_Y. July 25, 2007) (remaining “common

questions of law and fact do not overcome the risk of jury confu-

sion and possible prejudice to the separate defendants if the

Court were to consolidate this action for trial purposes.”).

quiry at all; its express purpose is to “permit[] the

use of innovative means of trial management con-

cerning issues unique to mass litigation, which

would in turn encourage 2 more expeditious resolu-

tion of these matters than that permitted by tradi-

tional means of case resolution.” Ibid. The Chief

Justice of the West Virginia Supreme Court of Ap-

peals invoked that rule here.?

Soon after the high court issued its order con-

solidating the cases, the number of claims ballooned

from roughly 120 to over 1,200, many of which have

subsequently been dismissed because the plaintiffs

failed to meet the court’s basic procedural require-

ments. Presumably, the number of cases remains

grossly inflated, because many additional claims suf-

fer from various irremediable flaws that will be dis-

covered only after Phase I is over. Accordingly, one

of the few tangible facts the jury will be told about

the plaintiffs—the number of claimants—will be mis-

leading.

In sum, petitioners now face a premature, aggre-

gated punitive damages proceeding in a case involv-

ing disparate claims, injuries and facts—a case that

therefore never could have been certified as a class

action.!° The Due Process Clause and this Ccourt’s

precedents demand more. This Court should grant

review in order to make clear that West Virginia

9 The trial court subsequently denied petitioners’ request for a

hearing to determine whether the pending cases presented

common issues of law or fact.

\0 For these reasons, courts around the country have refused to

grant class certification in smoking-and-health related cases.

See, e.g., Engle v. Liggett Group, Inc., 945 So. 2d 1246, 1267 n.9

(Fla. 2006) (collecting cases).

must revise its mass-tort litigation system to com-

port with due process. See, e.g., Lilly v. Virginia, 527

U.S. 116, 123 (1999) (certiorari granted because state

court’s decision “represented a significant departure

from {the United States Supreme Court’s] Confronta-

tion Clause jurisprudence’).

B. Immediate Review Is Warranted.

Certiorari is warranted because the trial plan

approved by the West Virginia courts cannot be rec-

onciled with this Court’s decisions in State Farm and

Williams, see S. Ct. R. 10(c). And this Court plainly

has jurisdiction to review the lower court’s denial of

petitioners’ request for a writ of prohibition. See Bd.

of Educ., 448 U.S. at 1345-46; Madruga, 346 U.S. at

557 n.1. Moreover, the circumstances of this case

demonstrate that the optimal time for review is now.

The constitutional violation is complete: the trial

that is set to begin on March 18, 2008 will be irrepa-

rably flawed from the outset. The deficiencies in the

trial plan go to the very heart of the Phase I jury’s

decision-making: that jury will be deprived of the

most fundamental information that should form the

basis for its verdict. Accordingly, there is no way to

salvage its findings. Unless this Court acts, those

findings will be carried forward into hundreds of

Phase II trials, conducted before different finders of

fact in numerous West Virginia courtrooms. See

App. 70a (Trial Plan 93(b)) (in Phase II, “[e]ither

separate individual juries, judge or judges will inde-

pendently address issues unique to each plaintiffs

compensatory damages and any other individual is-

sues in reasonably sized trial groups or on an indi-

vidual basis”).

Because of the flaws in this trial plan, there is no

possible way in which any punitive damages judg-

ment obtained by any plaintiff in this case could be

consistent with due process. Accordingly, although

this Court in theory could postpone its consideration

of this due process question while hundreds of sepa-

rate Phase II proceedings wend their way through

the courts, that course of action would entail years of

unnecessary delay and expense for the parties to this

case and the West Virginia courts. It would be

provident for this Court instead to exercise its juris-

diction over the decision denying petitioners’ request

for a Writ of Prohibition now. 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).

Immediate review is also warranted because the

damage done in Phase I—the jury’s assessment of a

punitive damages award by an unconstitutional pro-

cedure—cannot be undone through post-verdict or

appellate review. Post-trial remedies like remittitur

allow a court only to reduce excessive damages to the

maximum amount permissible under the Constitu-

tion. See, e.g., Cont Trend Res., Inc. v. OXY USA

Inc., 101 F.3d 634, 643 (10th Cir. 1996). But remitti-

tur cannot cure a fundamentally-flawed trial plan

like this one. The reason is simple: a jury that heard

only relevant and admissible evidence that bore a

nexus to the injuries of the plaintiffs before the court,

that had the opportunity to consider defendants’ af-

firmative defenses, and that knew the total amount

of compensatory damages that will ultimately be re-

covered in this litigation, might well award far less

than the maximum punishment allowed by the Con-

stitution.!!' See Merrick v. Paul Revere Life Ins. Co.,

11 Indeed, this Court has reached this conclusion in the context

of criminal sentencing. See Hicks v. Oklahoma, 447 U.S. 343,

500 F.3d 1007, 1018 (9th Cir. 2007) (remittitur can

remedy excessiveness, but it is inappropriate “where

the constitutional error stems from misguidance re-

garding the way the jury may use evidence in setting

an amount”); White, 500 F.3d at 972-73 (concluding

that a new trial on punitive damages, rather than

remittitur, is the “proper remedy” for a due process

violation); Ramirez v. New York City Off-Track Bet-

ting Corp., 112 F.3d 38, 40 (2d Cir. 1997)

(“If * * * the record establishes that the jury’s verdict

on damages was not only excessive but was also in-

fected by fundamental error, remittitur is improper.

In such a case, the judgment of the district court

should be vacated and the cause remanded for a new

trial on damages.”) (citation omitted). Given the in-

sufficiency of the remittitur remedy in these circum-

stances, the practical difficulties that would be cre-

ated if this Court were to postpone consideration of

this case and only later declare West Virginia’s trial

plan unconstitutional would be enormous.

Finally, immediate review is warranted in light

of the well-recognized fact that the extreme settle-

ment pressures presented in mass-tort cases of this

kind mean that very few such cases are ever tried to

a jury verdict. See, e.g., In re Chevron USA, Inc., 109

F.3d 1016, 1022 (5th Cir. 1997) (Jones, J., specially

concurring) (noting that a trial court’s case manage-

ment decisions in mass-tort cases are not often “ef-

fectively reviewable after trial’ because defendants

346 (1980) (where State amended its habitual offender statute,

defendant sentenced under old statute was entitled to new trial

on the appropriate sentence: “Oklahoma denied the petitioner

the jury sentence to which he was entitled under state law,

simply on the frail conjecture that a jury might have imposed a

sentence equally as harsh as” the one it imposed under the in-

valid statute).

face “enormous” settlement pressures even when the

odds of an adverse verdict are slim); Petition for Writ

of Certiorari at 28, Mobil Corp. v. Adkins, No. 02-

132, 2002 WL 32134868 (U.S. July 24, 2002) (“Given

the enormous potential liability that mass aggrega-

tions pose for defendants, combined with scrutiny

from financial markets, aggregated proceedings exert

powerful pressure on defendants to settle even merit-

less cases.”). This case thus presents this Court with

a rare opportunity to consider the question whether

a court may determine a defendant’s liability for pu-

nitive damages before determining whether the de-

fendant is legally responsible for any plaintiffs inju-

ries or to pay compensatory damages to any plaintiff.

The Court should take hold of this chance to provide

much-needed guidance to the lower courts.

CONCLUSION

The petition for a writ of certiorari should be

granted.

Respectfully submitted.

ANDREW R.C. GADDES ANDREW L. FREY

BRUCE CLARK Counsel of Record

Dechert LLP ANDREW H. SCHAPIRO

2929 Arch Street LAUREN R. GOLDMAN

Philadelphia, PA 19104 Kwaku A. AKOWUAH

(215) 994-4000 Mayer Brown LLP

1675 Broadway

Counsel for Petitioner New York, NY 10019

Philip Morris USA, Inc. (212) 506-2500

JOHN R. MUSGRAVE Counsel for Petitioner

Thompson Coburn LLP Philip Morris USA, Inc.

One US Bank Plaza

St. Louis, MO 63101 DONALD B. AYER

(314) 552-6000 Jones Day

51 Loutistana Ave., N.W.

Counsel for Petitioner Washington, D.C. 20001

Lorillard Tobacco Co. (202) 879-3989

Counsel for Petitioners

R.J. Reynolds Tobacco

Co. and Brown & Wil-

liamson Holdings, Inc.

Counsel for Petitioners

DECEMBER 2007

APPENDIX

TABLE OF CONTENTS

APPENDIX A: Order of the Supreme Court of

Appeals of West Virginia (November 7, 2007)......... la

APPENDIX B: Order of the Circuit Court of

Ohio County, West Virginia (August 28, 2007)........ 3a

APPENDIX C: Transcript of Hearing August

17, 2007 In the Circuit Court of Ohio County,

EI 5a

APPENDIX D: Order of the Circuit Court for

Ohio County, West Virginia (August 28, 2007)...... 15a

APPENDIX E: Transcript of Hearing May 23,

2007 In the Circuit Court of Ohio County,

Co occ denkandenssnoanecers 17a

APPENDIX F: Opinion and Order of the

Circuit Court of Ohio County, West Virginia

a sidhaansedananscansdéevasasecees 28a

APPENDIX G: Opinion of the Supreme Court

of Appeals of West Virginia (December 2,

oii sce Scnladissnennncanebibisescesacsesencs 3la

APPENDIX H: Opinion and Order of the

Circuit Court of Ohio County, West Virginia

Ss cuebinadancndannes pane 66a

APPENDIX I: Case Management Order/Trial

Plan of the Circuit Court of Ohio County, West

Viteiae Ganuary 11, ZOOD)..........c.cccccesccssccsscepecess. 70a

APPENDIX J: List of Plaintiffs With Claims

Pending in Civil Action No. 00-C-5000

sc asichnbaasensepenanecaaes 77a

APPENDIX K: List of Defendants Not Party

To the Writ of Prohibition Proceeding In the

Supreme Court of Appeals of West Virginia........ 110a

APPENDIX A

[Order of the Supreme Court of Appeals of

West Virginia (November 7, 2007)]

STATE OF WEST VIRGINIA

At a Regular Term of the Supreme Court of

Appeals continued and held at Charleston, Kanawha

County, on the 7th of November, 2007, the following

order was made and entered:

State of West Virginia ex rel. Philip Morris USA,

Inc.; Brown & Williamson Holdings, Inc.; Lorillard

Tobacco Company; and R.J. Reynolds Tobacco

Company,

Petitioners,

Vs.) No. 072903

Honorable Arthur M. Recht, Judge of the Circuit

Court of Ohio County, Chief of the Mass Litigation

Panel and All Plaintiffs in In Re: 5000 Consolidated

Matter,

Respondents.

On a former day, to-wit, September 27, 2007,

came the petitioners, Philip Morris USA, Inc., by

David B. Thomas, Pamela L. Campbell and Teresa

K. Thompson, Allen Guthrie McHugh & Thomas,

PLLC, its attorney; Brown & Williamson Holdings,

Inc. and R.J. Reynolds Tobacco Company, by W.

Henry Jernigan, Jr. and Brace R. Mullett, Dinsmore

& Shohl, LLP, their attorneys; and Lorillard Tobacco

Company, by Michael J. Farrell and Joseph M.

Farrell, Jr., Farrell & Farrell, L.C., its attorneys, and

presented to the Court their petition praying for a

writ of prohibition to be directed against the

respondent, Honorable Arthur M. Recht, Judge of the

Circuit Court of Ohio County, Chief of the Mass

Litigation Panel, as therein set forth.

Thereafter, on the 24th day of October, 2007,

pursuant to a request for a response under Rule

14(b) of the Rules of Appellate Procedure, came the

respondent plaintiffs, by Cindy J. Kiblinger, James

F. Humphreys & Associates, and Timothy N. Barber,

their attorneys, and presented to the Court their

initial response thereto.

Upon consideration whereof, the Court is 1: the

opinion that a rule should not issue. It is hereby

ordered that the petition for writ of prohibition

prayed for by the petitioners is hereby refused.

Justice Benjamin would grant.

A True Copy.

Attest: s/ Rory L. Perry

Clerk, Supreme Court of Appeals

APPENDIX B

[Order of the Circuit Court of Ohio County,

West Virginia (August 28, 2007)]

IN THE CIRCUIT COURT OF OHIO COUNTY,

WEST VIRGINIA

IN RE: TOBACCO LITIGATION

(Individual Personal Injury cases)

Civil Action No. 00-C-5000

(Judge Arthur M. Recht)

CRDER

By agreement, a telephonic hearing was held

August 17, 2007 on the issues raised in Defendants’

Motion for an Order Setting Forth Findings of Fact

and Conclusions of Law for the Purpose of Seeking

an Extraordinary Writ from the Supreme Court of

Appeals.

Upon the submissions and argument thereon,

the court announced a denial of the motion and

assigned as grounds therefor that the previous

holdings on such issues provide an adequate

articulation of necessary findings which include:

(1) The hearing held herein on December

14, 2006 and the resultant order entered December

26, 2006.

(2) The hearing held herein on May 23,

2007 and attendant order with attachment.

Accordingly, it is hereby ORDERED:

(1) Defendants’ Motion for an Order

Setting Forth Findings of Fact and Conclusions of

Law for the Purpose of Seeking an Extraordinary

Writ from the Supreme Court of Appeals is denied.

(2) A copy of the transcript of the hearing

held August 17, 2007 shall be filed by plaintiffs’

counsel upon its receipt and shall be a part of this

order as a reflection of the court’s holding.

Defendants’ objections and exceptions § are

preserved.

Entered this 28th day of August, 2007.

s/ Arthur M. Recht

Judge Arthur M. Recht

A copy, Teste:

Brenda L. Miller

Circuit Clerk

Presented by:

/s Timothy N. Barber

Timothy N. Barber (WVSB #231)

Post Office Box 11746

Charleston, WV 25339

(304) 744-4400

Counsel for Plaintiffs

APPENDIX C

[Transcript of Hearing August 17, 2007 In the

Circuit Court of Ohio County, West Virginia]

IN THE CIRCUIT COURT OF OHIO COUNTY

STATE OF WEST VIRGINIA

IN RE: TOBACCO LITIGATION:

CASE NO. 00-C-5000

PERSONAL INJURY CASES

MOTIONS (via telephone)

Before: HON. ARTHUR M. RECHT

Monday, August 17, 2007

4:30 p.m.

* *&

Whereupon the above entitled matter came on

for hearing before the Honorable Arthur M. Recht at

the Ohio County Courthouse, Wheeling, West

Virginia, and the proceedings were as follows:

APPEARANCES:

ON BEHALF OF THE PLAINTIFFS:

CINDY J. KIBLINGER, Esquire

James F. Humphreys & Associates, L.C., One

Bank Center, Suite 1113, 707 Virginia Street, East,

Charleston, West Virginia 25301

and

TIMOTHY N. BARBER, Esquire

P.O. Box 11746, Charleston, West Virginia 25339-

1746

and

KENNETH B. McCLAIN, Esquire

Humphrey, Farrington & McClain, P.C., P.O. Box

900, Independence, Missouri 64051-0900

ON BEHALF OF PHILIP MORRIS:

ANDREW GADDES, Esquire

BRUCE W. CLARK, Esquire

Dechert, Price & Rhoads, 4000 Bell Atlantic Tower,

1717 Arch Street, Philadelphia, Pennsylvania 19103-

2793

and

PAMELA L. CAMPBELL, Esquire

Allen, Guthrie & McHugh, 1300 Bank One Center,

P.O. Box 3394, Charleston, West Virginia 25333-

3394

ON BEHALF OF LORILLARD TOBACCO

COMPANY:

JOHN R. MUSGRAVE, Esquire

Thompson & Coburn, LLP, One Mercantile Center,

St. Louis, Missouri 63101

and

JOSEPH M. FARRELL, JR., Esquire

Farrell, Farrell & Farrell, L.C., The Farrell Building,

914 Fifth Avenue, P.O. Box 6457, Huntington, West

Virginia 25772-6457

ON BEHALF OF R. J. REYNOLDS TOBACCO

COMPANY and BROWN & WILLIAMSON:

JEFFREY FURR, Esquire

THOMAS SCHROEDER, Esquire

Wombie Carlyle Sandridge & Rice, Post Office

Drawer 84, Winston-Salem, North Carolina 27102

and

W. HENRY JERNIGAN, JR., Esquire

Dinsmore & Shohl, 900 Lee Street, Huntington

Square, West Virginia 25301

ON BEHALF OF LIGGETT GROUP, INC.,

LIGGETT & MEYERS, INC., AND BROOKE

GROUP LIMITED:

MARK TROY, Esquire

Bailey & Wyant, PLLC, 505 Capitol Street, Suite

1007, Post Office Box 3710, Charleston, West

Virginia 25337

x *K*

PROCEEDINGS

xk**

THE COURT: We're on the record now, and

then, one more time, if we can, first for the plaintiffs,

why don’t you just state your full name. I will say

that, when you speak, if you can just identify

yourself each time you speak, that way we can have

you down on the record. All right?

MR. BARBER: For the plaintiffs, it’s Timothy N.

Barber and Cindy Jo Kiblinger and Kenneth

McClain for the plaintiffs.

THE COURT: All right. Okay, got that.

MR. GADDES: It’s Andrew Gaddes and Bruce

Clark and Pamela Campbell for Philip Morris.

MR. FURR: We have Jeff Furr, Tom Schroeder,

and Henry Jernigan for Brown & Williamson and

R.J. Reynolds.

MR. MUSGRAVE: John Musgrave for Lorillard,

and Mr. Farrell, local counsel.

THE COURT: All right. Joseph Farrell, right?

MR. FARRELL: Yes, Your Honor.

MR. TROY: Mark Troy for the Liggett

defendants.

THE COURT: Right. Anybody else? Good. All

right.

Let me just address one matter rather quickly. I

don’t know if the plaintiffs received the letter dated

August 16th from Pam in which she enclosed an

order which modified the case-management plan.

It's Revision No. 24, and it has, basically—it

structures where we're going from here on.

Did the plaintiffs receive that?

MR. McCLAIN: Yes, and I think we responded.

THE COURT: Is there any objection to the

order?

MR. McCLAIN: Yes, we had some suggested

change in dates as I understand it. I’ve been out,

Judge, but didn’t we have some changes in the dates

that we were asking for?

MR. BARBER: In addition to the structural

things, we have some other objections, Judge. As an

example—this is an example now—of requesting us

to send everything FedEx and fax for everything to

everybody, and the filing times of 3:30 p.m.

But that’s just an example of the—we just want

to reserve rather than have you precipitously enter

an order changing the thing, we want to have you be

able to review our objections to it. And then

whatever you want to do is fine, but we do have some

objections to it, substantive objections.

THE COURT: And you say you have sent that to

me?

MR. BARBER: No.

THE COURT: You're going to?

MR. BARBER: We just got the thing.

THE COURT: All right, all right; so you'll have

it in next week?

MR. BARBER: Next week, certainly by

sometime next week. Whatever time you tell us we

have to have it, we'll have it in there.

THE COURT: Have it in by Friday if you can,

please.

MR. BARBER: Okay. That will be fine, Judge.

Thank you.

THE COURT: All right. That’s one thing. And

now, the- this matter is set for consideration of a

10a

motion requesting this Court to set forth findings of

fact and conclusions of law, specifically, I presume,

relating to the case-management plan, so that it

could serve as a basis to seek extraordinary relief in

the West Virginia Supreme Court.

MR. FURR: Yes, Your Honor.

THE COURT: Now, who’s going to speak?

MR. FURR: This is Jeff Furr, Your Honor, on

behalf of the defendants. As the Court has

recognized, we have decided again to seek review of

the trial plan by writ, and perhaps out of an

abundance of caution, but our interpretation of the

Allstate v. Gaughan case is that it may be incumbent

on us to request the Court to make findings of fact

and conclusions of law and reduce that to writing in

order for the Supreme Court to be properly able to

consider our writ.

THE COURT: Okay.

MR. BARBER: Judge, this is Tim Barber, as you

well know, the rules require a final judgment to

make findings of fact and conclusions of law under

54(b). That’s really not required in this thing;

however, we do have a transcript of the hearing that

you had in May, in which you articulate at length

why you're doing all this.

And that’s part of the transcript, and these guys,

if they want to go up on a writ, you’ve made it clear

what your findings—in that transcript. It’s not a

real question about it, and for them—I think they’ve

come up with some kind of a thing about that you—

something that’s self—a bootstrap operation for them

to be able to go to the Supreme Court.

lla

If you want to take your transcript and you want

to articulate your findings of fact that are different in

some respects from the—from that in which that you

already have articulated, then that’s fine. But we

believe that you—it’s a matter of record; it’s in the

transcript.

Frankly, Judge, in the past, Pamela Campbell,

who’s on this phone message with us, has always

supposedly authored these orders. And, of course, in

this case they lost, so she apparently decided not to

enter an order reflecting that. Nevertheless, it is a

matter of record that they can go to the Supreme

Court, as you very well know, and say this is the

ruling of the judge.

Now, if you want to change it in some fashion,

then you—we'll be glad to provide you with a copy of

the transcript of your findings, and that’s it. We are

not—to have an appetite to convenience Mr. Furr or

these defendants for going again, over and over

again. And this again is going to be an effort to try

to delay this thing again from the March date, which

we oppose.

But I’ve said all I'm going to. Ken McClain is on

here with me. We have—if he wants to add

something to what I just said, that’s fine.

MR. McCLAIN: No, Judge, I don’t.

THE COURT: All right.

MR. FURR: Jeff Furr. I looked very closely.

Frankly, I have no idea what the response to the

argument really is, but, nonetheless, I indicated that

we were doing this out of an abundance of caution.

I think that one thing that no one should want,

including the plaintiffs, is for the Supreme Court to

12a

decline to accept our writ because it was under the—

because it concluded that it did not know enough

about the trial plan yet in order to review it properly.

But under Gaughan we made this motion; we

think that further articulation of the Court’s views of

the—its intentions with respect to the trial plan

might well be of assistance to the Supreme Court.

As to why the last order has not been entered yet, I’d

have to defer to Pam and let her explain to you what

the delay has been.

THE COURT: Well, let me just respond. I’ve

given this a lot of thought, and I’ve gone back and |

have—all the way back and reread my memorandum

of opinion and order that grew out of the Allstate

case.

And then, of course, that basically served as a

basis for the certified question that went to the

Supreme Court, and I reread their opinion and the

various other ancillary opinions.

And I then looked at the—as to whether or not

the Philip Morris versus Williams case may have—

requires additional findings of fact.

I think, and I believe that I’ve already made

them. And the trial plan—and what I’m basically

doing is taking the lead from the opinion of Justice

Maynard, and I don't believe that the Williams case

changes that. And I said that, and I’m not going to

change my views on that.

And the trial plan as approved so far by the West

Virginia Supreme Court by their opinion, which was

filed December 2, 2005, is still continuing, and I don’t

think anything more is needed.

l3a

I do think the record and the reason—when I laid

all these various reasons as to why the trial plan is

going to continue, it was really in—TI had in mind

those being the findings of fact and conclusions of

law.

So you can take those—and I think the Gaughan

case, basically, and I understand why you're

concerned about it. But I think it satisfies any

requirement the Supreme Court might have

regarding this issue.

So I’m just going to stand on what I have already

said.

MR. FURR: Thank you. You understand I said

we were doing this out of abundance of caution.

THE COURT: I appreciate that, I do; that’s fine.

As far as I'm concerned, all I want to do now—you

obviously can do what you feel you have to do to

protect your clients’ interests. That’s fine. As far as

I’m concerned right now, I’m just trying to get ready

for the March trial date. So until—

MR. BARBER: Judge, not to interrupt, but—this

is Tim Barber—because—that, apparently, we

prevailed in this thing, I’m going to go ahead and

draft the order myself.

And so could we just simply say that the motion

is denied based upon the fact that you have already

articulated in your previous ruling of your—the

reasons behind your findings, but—your decision.

Would that be—

THE COURT: The reasons being...

MR. BARBER: Brief, very, very brief order?

14a

THE COURT: The reason behind my decision to

continue with the original trial plan as formulated

and as, I believe, endorsed by the opinion filed

December 2, 2005, and the subsequent findings of

fact, conclusions of law that I made just ratifying

that, yes, that’s it.

MR. BARBER: Thank you, Judge.

THE COURT: Thank you all very much.

UNIDENTIFIED SPEAKER: Thank you.

**¥*

(This hearing was concluded at 4:50 p.m.)

**¥*

15a

APPENDIX D

[Order of the Circuit Court for Ohio County,

West Virginia (August 28, 2007)]

IN THE CIRCUIT COURT OF OHIO COUNTY,

WEST VIRGINIA

IN RE: TOBACCO LITIGATION

(Individual Personal Injury cases) Civil Action

No. 00-C-5000

(Judge Arthur M. Recht)

ORDER

At a hearing on May 23, 2007 set by agreement,

respective counsel addressed the issues raised in

Defendants’ Motion to Vacate the Trial Plan in Light

of Williams and the responses filed attendant

thereto.

Upon the submissions and argument thereon,

the court announced a denial of the motion and

articulated the grounds therefor.

Accordingly, it is hereby ORDERED:

(1) Defendants’ Motion to Vacate the Trial Plan

in Light of Williams is denied for the reasons

assigned.

(2) A copy of the transcript of the hearing held

May 23, 2007 is attached and made a part of this

Order as a reflection of the court’s holding.

Defendants’ objections and exceptions are

preserved.

Entered this 28th day of August, 2007.

s/ Hon. Arthur M. Recht

16a

Judge Arthur M. Recht

Presented by:

s/ Timothy N. Barber by ctk

Timothy N. Barber (WVSB #231)

Post Office Box 11746

Charleston, WV 25339

(304)744-4400

Counsel for Plaintiffs

17a

APPENDIX E

[Transcript of Hearing May 23, 2007 In the

Circuit Court of Ohio County, West Virginia]

IN THE CIRCUIT COURT OF OHIO COUNTY

STATE OF WEST VIRGINIA

IN RE: TOBACCO LITIGATION:

CASE NO. 00-C-5000

PERSONAL INJURY CASES:

* * *

MOTION TO VACATE TRIAL PLAN

Before: HON. ARTHUR M. RECHT

May 23, 2007

11:15 a.m.

* * *

Whereupon the above entitled matter came on

for hearing at the Ohio County Courthouse,

Wheeling, West Virginia, and the proceedings were

as follows:

* * *

APPEARANCES:

ON BEHALF OF THE PLAINTIFFS:

CINDY J. KIBLINGER, Esquire

James F. Humphreys & Associates, L.C., One Bank

Center, Suite 1113, 707 Virginia Street, East,

Charleston, West Virginia 25301

and

18a

TIMOTHY N. BARBER, Esquire

P.O. Box 11746, Charleston, West Virginia 25339-

1746

and

KENNETH B. McCLAIN, Esquire

SCOTT HALL, Esquire

Humphrey, Farrington & McClain, P.C., P.O. Box

900, Independence, Missouri 64051-0900

ON BEHALF OF PHILIP MORRIS:

ANDREW GADDES, Esquire

BRUCE W. CLARK, Esquire

JASON MURTAGH, Esquire

Dechert, Price & Rhoads, 4000 Beil Atlantic Tower,

1717 Arch Street, Philadelphia, Pennsylvania 19103-

2793

and

PAMELA L. CAMPBELL, Esquire

THERESA THOMPSON, Esquire

Allen, Guthrie & McHugh, 1300 Bank One Center,

P.O. Box 3394, Charleston, West Virginia 25333-

3394

ON BEHALF OF LORILLARD TOBACCO

COMPANY:

JOHN R. MUSGRAVE, Esquire

MICHAEL B. MINTON, Esquire

Thompson & Coburn, LLP, One Mercantile Center,

St. Louis, Missouri 63101

and

19a

JOSEPH M. FARRELL, JR., Esquire

Farrell, Farrell & Farrell, L.C., The Farrell Building,

914 Fifth Avenue, P.O. Box 6457, Huntington, West

Virginia 25772-6457

ON BEHALF OF R. J. REYNOLDS TOBACCO

COMPANY:

JEFFREY FURR, Esquire

THOMAS SCHROEDER, Esquire

Womble Carlyle Sandridge & Rice, Post Office

Drawer 84, Winston-Salem, North Carolina 27102

ON BEHALF OF BROWN & WILLIAMSON

TOBACCO CORPORATION and R.J.R REYNOLDS

TOBACCO:

BRACE R. MULLETT, Esquire

Dinsmore & Shohl, LLP, 1900 Chemed Center, 255

East Fifth Street, Cincinnati, Ohio 45202-3172

ON BEHALF OF LIGGETT GROUP, INC.,

LIGGETT & MEYERS, INC., AND BROOKE

GROUP LIMITED:

MARK TROY, Esquire

Bailey & Wyant, PLLC, 505 Capitol Street, Suite

1007, Post Office Box 3710, Charleston, West

Virginia 25337

* * *

PROCEEDINGS

* * *

THE COURT: Okay, Be seated, please. Good

afternoon, everybody.

20a

MR. FURR: Good afternoon, Your Honor.

THE COURT: All right. We got some matters

to address here today, I guess. I don’t know the

order that you want to take them in.

I guess probably something that we should

address and dispose of as expeditiously as possible is

the defendants’ motion to vacate the trial plan in

light of the recent United States Supreme Court case

of Philip Morris versus Williams.

Were you stretching or did you—

* * *

(Laughter.)

> =

MR. GADDES: Sorry, Your Honor, I was getting

ready to talk, but looks like Your Honor might have

something else to say first.

THE COURT: I have read it all, read

everybody’s papers. And I always like to hear good

argument, but as I—this is now the second time that

we're back looking at the validity, I guess, of the

original case-management plan. The first was in

light of the Campbell case, and now in light of the

Wilhams case. And do either of those cases do

anything to recommend an alteration to the case-

management plan?

As you all know, we’re not going to rehash

Campbell. The West Virginia Supreme Court has

spoken on that, and that’s the final word.

The question now is: What has Williams added

or subtracted at all to what the West Virginia

Supreme Court has said in terms of validating the

case-management plan?

2la

If you—this is how I look at Williams as it relates

to the case-management plan. And I believe the core

holding—anytime the United States Supreme Court

gets involved in discussing punitive damages, there’s

a hell of a lot more heat than light on where we're

going. You end up just eating your own tail as to

really what they’re trying to say.

But I think what, in this case, Justice Breyer

was saying that—he says:

The question we addressed today concerns a

large state court punitive damage award, and we're

asked whether the constitution’s due-process clause

permits a jury to base that award in part upon its

desire to punish the defendant for harming persons

who are not before the Court, for example, victims

whom the parties do not represent, and we hold that

such an award would amount to taking the property

from the defendant without due process.

I guess, basically, the core of what they were

trying to say—they use a lot of words to say that, but

I think that’s basically what they were saying, and I

believe that, in this case, that we simply do not have

parties who are not before the Court.

Everybody, every plaintiff in this case, is a party

in the whole scheme of things, both in terms of Phase

I and Phase II. There are a group of plaintiffs; there

are no non-parties in this case.

At some point in Phase IJ you're going to get

down to specifics relating to individual plaintiffs on

issues of causation and other individual issues that

have to be decided, and how they may have been

harmed by a particular product, and to the extent

would the multiplier, if in fact there is a multipler,

22a

apply to any compensatory award. But that’s in

Phase II.

Phase I, which would be tried basically when you

try the product defect, and, as we said way back—

and the case of Alkire versus First National Bank of

Parsons probably does more to assist in formulating

how a punitive-damage claim should be tried, I

think, than every court in the United States. Just so

happens in this case it applies to West Virginia

because it sets out—it doesn’t get too confused.

You see, the problem—what many times

happens, I think, in punitive damage is, you start to

overlap when you get into the issues of the size of the

award, the ratios, reprehensibility, and that becomes

mixed into the whole question of whether or not

you're even entitled to punitive damages.

Everything gets—it’s one big stew, and what we

try to do in West Virginia is to make it a little easier.

And that was—what we said in Alkire is: Okay,

forget about TXO and forgot about Garnes initially;

just put that aside; don’t jump to that yet. Let’s first

off, obviously, determine if there’s liability and, then,

determine under the standard of Mayer versus

Frobe, the standard which we still use in these kind

of cases.

There are some other punitive damage cases that

use another standard, but that’s not involved here.

There’s an actual malice standard in some insurance

cases which doesn’t apply here.

But you then put on your evidence and—as we'll

do in this case—and the conduct of all the defendants

as it relates to Mayer versus Frobe once we get into

the—into that phase of the case.

23a

And the jury will be asked initially—well, even

before we get there, there will be a determination

made, as a matter of law, as to whether or not that

question should even go to the jury: Is there enough

evidence presented that would carry to the jury

whether or not the standard of Mayer versus Frobe

have been violated? Let’s say: Yes, there has been.

So the jury gets the question.

Initially, when you—on your first part of the case

here, you'll be arguing product defect and conduct.

That’s all at that point. And the jury comes back,

and let’s assume the product is defective by whatever

standard we use, they come back and say: Yes. All

the defendants have acted improperly insofar as all

the plaintiffs are concerned in this case. They won't

know them, of course; we know them. But their

conduct is such that, once a plaintiff shows that they

smoked that particular product, then they would be

the beneficiary of whatever punitive damage award

would be awarded.

Now you get, now you get down—it’s over; that

part’s over. You tell the jury: Go home, come back

the next day. Next day you come back, and now you

try all the issues of reprehensibility, of—well, of TXO

and Garnes and all the standards that are contained

in those cases.

That's where you get to the relationship between

the harm, and you get to the question of repre—

reprehensibility seems to be on everybody's mind in

Williams. You get to that as it relates to the

plaintiffs in this case.

There are no nonparties. I guess that’s a terrible

—probably bad English, but that’s why I don’t think

Williams even—as, a matter of fact, I quite frankly

24a

thought, and I said it—I thought Campbell was a

case that may have impacted more on this plan than

did the Williams case, and it didn’t, well, according

to the West Virginia Supreme Court.

So I'm not going to change the trial plan. Asa

matter of fact, if—and maybe it was the mood that I

was in this past weekend when I looked at this thing.

I feel stronger than ever that it is—that it is a proper

plan.

It’s going to take a lot of work; it’s not easy.

We're going to have to be very, very skillful in how

we—in one of your papers, you said: Doesn’t make

any difference about the interrogatories.

I think the verdict form here and how we

approach the jury is going to be very important. We

can’t ignore that. But I think that’s—that’s how this

case can proceed on without in any way—now,

maybe the United States Supreme Court will get

another case and maybe come out, and things will be

a little different. Hopefully, this case will be tried at

least at this level before then.

So for those reasons, the motion to vacate the

trial plan will be denied, and the objection of the—all

the defendants will be saved to that ruling. All right.

I don’t know what else we have. We have now—

there’s a motion—is this set for today, the motion to

dismiss the 58 plaintiffs?

MR. HALL: The agenda letter we got, Your

Honor, only had the motion to vacate the trial plan.

THE COURT: What else are we hearing today?

MR. LONG: Novhing, that was all that was on the

agenda letter.

THE COURT: That’s all?

MR. LONG: Yeah.

THE COURT: That’s all we came for?

MR. LONG: That’s it.

THE COURT: You drove all this way? Well, I

shouldn’t say that. You mean, I spent all this time.

Is that all we’re doing today?

MR. McCLAIN: As far as we know.

THE COURT: Is that all we’re going to today?

MR. GADDES: Uh-huh.

THE COURT: When are we doing this other

stuff?

MR. McCLAIN: Later.

THE COURT: Okay. Well, everybody. Now, you

know—let’s now get—we know we have a trial date

set. Now, gentlemen, ladies, whatever you want to

do, you do.

MR. FURR: We understand.

THE COURT: You've never stood on ceremonies

before. My skin is, in this case, is as a rhinoceros.

You just do what you have to do. But right now

we re still set for March 17th.

And you want me to give you another date for

some of this other stuff. What do you want me to do?

I got the whole afternoon. I got to go home and play

with my dog.

MR. HALL: I think that’s the big issue before

the Court, honestly, Your Honor, and some of these

other issues are fairly inconsequential. I don’t see a

real need to set up a hearing and come back here for

another 20 minutes to deal with some of the—

26a

THE COURT: No, as a matter of fact, some of

this stuff, quite frankly, and we have before, if you

want to deal with it by telephone, we can do it by

telephone, I don’t care.

MR. McCLAIN: We would prefer that if you

would do that.

THE COURT: Doesn’t make any difference to

me. That's fine. Are things moving along on these—

I gathered, in regard to these encumbered plaintiff

thing—I don’t understand what’s going on, to tell you

the truth.

But it’s not set for today, then we better set it

down fairly quickly. Get a time when everybody is

all right here and then give Doreen a call and set it

down. If you want to it by phone, be happy to do it

by phone. All right.

Sorry to get you all out.

MR. McCLAIN: Thank you, Judge.

MR. HALL: Thank you, Your Honor.

* * *

(This hearing was concluded at 1:45 p.m.)

* * *

CERTIFICATE

* * *

I, Katherine L. Warren, Official Court Reporter

for the State of West Virginia, do hereby certify that

the foregoing is a true and accurate transcript of the

proceedings as taken stenographically by me at the

time and place aforementioned.

Katherine L. Warren, C.C.R.

2/a

Certified Court Reporter

28a

APPENDIX F

[Opinion and Order of the Circuit Court of

Ohio County, West Virginia (December 26,

2006)]

IN THE CIRCUIT COURT OF OHIO COUNTY,

WEST VIRGINIA

IN RE: TOBACCO LITIGATION

(INDIVIDUAL PERSONAL INJURY CASES)

Civil Action No. 00-C-5000

(JUDGE ARTHUR M. RECHT)

MEMORANDUM OF OPINION AND ORDER

(Scope of issues to be tried in Phases I and Ia of the

Case Management Order)

The defendants appear to be vexed concerning

the issues to be tried in phase I (the defect, if any, of

each defendant’s product) and Ia (each defendant’s

conduct). Hopefully, this opinion and order will

remove any confusion about what will be tried in

phase [.!

Phase I concentrates on each defendant’s product

in terms of whether it was defective and the conduct

of each defendant to the extent that a punitive

damage award is warranted against each defendant,

1 There are actually only two phases contemplated by the case

management order. Phase I, which collectively includes each

defendants product defect, if any, and each defendants conduct

measured against the standards of Mayer v. Frobe, 40 W. Va.

246, 22 S.E. 58 (1895), Phase II, which includes individual

plaintiff issues of causation, extent of injuries and damages.

Throughout the remainder of this opinion references will be

made only to Phase I and its broadest sense and, if necessary,

Phase II, as opposed to phases I and Ia.

29a

and if so, what the punitive damage award should be

expressed in terms of a punitive damage multiplier.

The perspective of Phase I is each defendant’s

product and each defendant’s conduct. Testimony

will concentrate on each defendant’s product vis-a-vis

product defect with appropriately formulated

interrogatories dedicated to each defendant.

Phase I testimony will also concentrate on each

defendant’s conduct within the framework of Mayer

v. Frobe, supra.

At the close of the case a determination will be

made as to whether, as a matter of law, the jury

should determine if any of the defendants’ conduct

justifies a punitive damage award: If that

determination is in the affirmative to any or all

defendants, the jury will be given appropriate

formulated interrogatories directed to that defendant

whose conduct as a matter of law warranted further

jury consideration.

In the event the jury finds that any defendants’

conduct warrants a punitive damage award, then

further testimony will be presented to the jury

within the paradigms contained in: Garnes v.

Flemming Landfill, Inc., 186 W.Va. 656, 413 S.E.2d

897 (1991); TXO Prod. Corp. v. Alliance Res. Corp.,

187 W.Va. 457, 419 S.E. 2d 870 (1992); and Campbell

v. State Farm, 530 U.S. 408, 123 S.Ct. 1134, 155

L.Ed.2d 585 (2003), to determine the amount of the

punitive damage award, again expressed within an

appropriately formulated interrogatory. See, Alkire

v. First National Bank of Parsons, 197 W.Va. 22, 475

S.E.2d 122 (1996).

It is so ORDERED.

30a

A copy of this Memorandum of Opinion and

Order has been mailed this date to liaison counsel for

the plaintiffs, Cindy Kiblinger, Esquire, James F.

Humphries and Associates, United Center, 505

Virginia Street East, Suite 800, Charleston, WV

25301; and liaison counsel for the defendants,

Pamela Kandzari Campbell, Esquire, Allen Guthrie

McHugh and Thomas, P.O. Box 3394, Charleston,

WV 25301.

ENTER this 26th day of December, 2006.

s/ ARTHUR M. RECHT, JUDGE

3la

APPENDIX G

[Opinion of the Supreme Court of Appeals of

West Virginia (December 2, 2005)]

Supreme Court of Appeals of West Virginia.

In re TOBACCO LITIGATION

(Personal Injury Cases)

No. 32552.

Submitted: Sept. 20, 2005.

Filed: Dec. 2, 2005.

Syllabus by the Court

The United States Supreme Court’s decision in

State Farm v. Campbell, 538 U.S. 408 (2003), does

not preclude the bifurcation of a trial into two phases

wherein certain elements of liability and a punitive

damages multiplier are determined in the first phase

and compensatory damages and punitive damages,

based on the punitive damages multiplier, are

determined for each individual plaintiff in the second

phase.

Justice MAYNARD delivered the Opinion of the

Court.

Justice STARCHER concurs and reserves the

right to file a concurring opinion.

Justice BENJAMIN concurs and reserves the

right to file a concurring opinion.

MAYNARD, Justice.

This case concerns the following certified

question from the Circuit Court of Ohio County:

32a

Does the Due Process Clause of the Fourteenth

Amendment to the Federal Constitution, as

interpreted by State Farm v. Campbell, preclude a

bifurcated trial plan in a consolidated action

consisting of personal injury claims of approximately

1,000 individual smokers, wherein Phase I of the

trial would decide certain elements of liability and a

punitive damages multiplier and Phase II of the trial

would decide for each plaintiff compensatory

damages and punitive damages based upon the

punitive damages multiplier determined in Phase [?

For the reasons that follow, we answer the

certified question in the negative.

FACTS

On September 28, 1999, then Chief Justice Larry

Starcher entered an administrative order, pursuant

to Rule 26 of the West Virginia Trial Court Rules for

Trial Courts of Record, consolidating and

transferring all similar tobacco litigation pending at

that time to the Circuit Court of Ohio County with

Judge Arthur M. Recht, a member of the Mass

Litigation Panel, presiding. According to the parties,

the litigation now includes approximately 1,100

individual plaintiffs’ claims.

On January 11, 2000, the circuit court entered a

“Case Management Order/Trial Plan’? that ordered

2 This Court has recognized that trial courts have significant

leeway in implementing a mass trial format. State ex rel. Mobil

Corp. v. Gaughan, 563 S.E.2d 419 (2002), cert denied, Mobil

Corp. v. Adkins, 537 U.S. 944 (2002). In Syllabus Point 3 of

33a

the consolidation of all pending personal injury

tobacco cases in a single consolidated trial, with the

trial issues to be bifurcated as follows:

(a) Phase I-General liability issues common to all

defendants including, if appropriate, defective

product theory; negligence theory; warranty theory;

and any other theories supported by pretrial

development.

Also to be tried in Phase I will be entitlement to

punitive damages|.]

(b) Phase II-Individual claims of the plaintiffs

whose cases have been consolidated. Either separate

individual juries, judge or judges will independently

address issues unique to each plaintiffs

compensatory damages and any other individual

issues in reasonably sized trial groups or on an

individual basis.

The defendant tobacco companies ultimately

moved to revise this trial plan by removing the issue

of the entitlement to and, if appropriate, the amount

of punitive damages from the jury’s consideration in

Phase I of the trial based on the U.S. Supreme Court

case of State Farm v. Campbell, 538 U.S. 408 (2003).

By order of June 16, 2004, the circuit court vacated

and set aside the January 11, 2000, trial plan order.

The circuit court found that Campbell stands for the

principle that the conduct of a party against whom

State ex rel. Appalachian Power Co. v. MacQueen, 479 S.E.2d

300 (1996), we held:

A creative, innovative trial management plan developed by a

trial court which is designed to achieve an orderly, reasonably

swift and efficient disposition of mass liability cases will be

approved so long as the plan does not trespass upon the

procedural due process rights of the parties.

34a

punitive damages are sought must have a direct

nexus to a specific person who claims to have been

damaged by that conduct. The circuit court further

found that “[t]he emphasis upon a_ subjective

analysis of the defendant's conduct vis-a-vis a

specific plaintiff requires that the defendant’s

conduct be tailored to each plaintiff],]” and concluded

that this could not be accomplished under the

existing trial plan order. The circuit court certified

the question set forth above to this Court in a

September 24, 2004, order and answered the

question in the affirmative.

II.

STANDARD OF REVIEW

“The appellate standard of review of questions of

law answered and certified by a circuit court is de

novo.” Syllabus Point 1, Gallapoo v. Wal-Mart Stores,

Inc., 475 S.E.2d 172 (1996).

IIl.

DISCUSSION

The issue before is whether the United States

Supreme Court’s decision in State Farm v. Campbell,

538 U.S. 408 (2003) precludes bifurcation as

originally ordered by the circuit court wherein the

punitive damages multiplier would be determined

prior to the assessment of compensatory damages for

each plaintiff.

The plaintiffs below support the circuit court’s

vacated trial plan. They assert that the plan did not

violate Campbell, which, they allege, is not a

35a

fundamental change of long-standing punitive

damages law but rather is perfectly consistent with

such law. The defendant tobacco companies, on the

other hand, challenge the circuit court’s trial plan

essentia!ly on the basis that it violates Campbell by

permitting the plaintiffs to show the reprehensibility

of the defendants’ conduct,? for the purpose of

proving the appropriateness of punitive damages, by

admitting evidence of conduct that was dissimilar to

the conduct that injured particular plaintiffs. The

defendants assert that evidence of prior bad conduct

must be related to the defendant’s actions toward

individual plaintiffs in order to be relevant to the

punitive damages analysis.

In Campbell, the insureds brought an action

against their insurer, State Farm, to recover for bad-

faith failure to settle within the policy limits and

damages for fraud and intentional infliction of

emotional distress. A jury awarded the insureds $2.6

million in compensatory damages and $145 million

in punitive damages, which the trial court reduced to

$1 million and $25 million respectively. On appeal,

the Utah Supreme Court reinstated the $145 million

punitive damages award. The United States

Supreme Court subsequently reversed the punitive

damages award because it found it to be “neither

reasonable nor’ proportionate to the wrong

committed,” and “an irrational and _ arbitrary

3 In Garnes v. Fleming Landfill, Inc., 413 S.E.2d 897 (1991),

this Court held that the jury may consider the reprehensibility

of the defendant's conduct including whether and how often the

defendant engaged in similar conduct in the past. We believe

that Campbell does not materially alter this holding. Rather,

Campbell generally addresses the requirement that evidence of

prior bad conduct must be “similar.”

36a

deprivation of the property of the defendant” in

violation of the Fourteenth Amendment. Campbell,

538 U.S. at 429. The Court explained that the

insureds’ attempt to show the reprehensible conduct

of State Farm by introducing evidence of State

Farm’s business practices for over 20 years in

numerous states was constitutionally improper.

According to the Court:

The [insureds] have identified scant evidence

of repeated misconduct of the sort that

injured them. Nor does our review of the

Utah courts’ decisions convince us that State

Farm was only punished for its actions

toward the [insureds]. Although evidence of

other acts need not be identical to have

relevance in the calculation of punitive

damages, the Utah court erred here because

evidence pertaining to claims that had

nothing to do with a third-party lawsuit was

introduced at length. Other evidence

concerning reprehensibility was even more

tangential. For example, the Utah Supreme

Court criticized State Farm’s investigation

into the personal life of one of its employees

and, in a broader approach, the manner in

which State Farm’s policies corrupted its

employees. The [insureds] attempt to justify

the courts’ reliance upon this unrelated

testimony on the theory that each dollar of

profit made by underpaying a third-party

claimant is the same as a dollar made by

underpaying a first-party one. For the

reasons already stated, this argument is

unconvincing. The reprehensibility guidepost

does not permit courts to expand the scope of

the case so that a defendant may be punished

37a

for any malfeasance, which in this case

extended for a 20-year period. In this case,

because the [insureds] have shown no

conduct by State Farm similar to that which

harmed them, the conduct that harmed them

is the only conduct relevant to the

reprehensibility analysis.

538 U.S. at 423-24 (citations omitted).

After carefully considering the parties’

arguments and the Supreme Court’s decision in

Campbell, this Court finds that Campbell, which did

not involve mass tort litigation, does not per se

preclude the circuit court’s original trial plan. We

emphasize that the question before this Court is a

narrow one. Accordingly, our answer is strictly

limited to this narrow question. Our response is

limited to the issue of whether State Farm ov.

Campbell precludes a bifurcated trial plan like the

one below. Further, we do not address whether there

may be other legal reasons to question the circuit

court’s bifurcated trial plan. Nor do we, or indeed can

we, address in the abstract the specific evidence that

may be presented on the issue of reprehensibility.

Our conclusion in this case simply is, first, we find

nothing in Campbell that mandates a reexamination

of our existing system of mass tort litigation. Second,

we find nothing in Campbell that per se precludes a

bifurcated trial olan in which a punitive damages

multiplier is established prior to the determination

of individual compensatory damages. Beyond this,

we leave more specific issues for another day. As this

Court stated in State ex rel. Mobil Corp. v. Gaughan,

563 S.E.2d 419 (2002),

we cannot substantively address Mobil’s

concerns regarding the potential use of a

38a

matrix, or a punitive damage multiplier,

because the trial court has not yet

definitively ruled upon the use of either of

these mechanisms. Accordingly, any

consideration of these issues at this time

would be clearly premature. The trial court’s

announcement to postpone for the time

being, any decision regarding the potential

use of a matrix underscores the precipitous

nature of ruling on this issue at this

juncture. Matters such as a matrix and the

use of a punitive damage multipher, given

the unresolved nature of the use of such

mechanisms, can be better addressed by this

Court upon appeals taken from final orders.

Gaughan, 563 S.E.2d at 426. Similarly, in the

instant case, any issue beyond that set forth in the

certified question is one that this Court will only

consider on appeal with the benefit of a fully

developed record and a final order. To reiterate, it is

clear to this Court that Campbell does not eliminate

mass tort litigation as provided for in our Trial Court

Rule 26. Further, it is significant to us that

bifurcated trial plans structured like the one at issue

are common in West Virginia as well as other

jurisdictions. In sum, absent a clear indication to the

contrary, we believe that Campbell does not preclude

the bifurcated trial plan at issue.

The circuit court found in its order setting aside

its original trial plan, and the defendants agree, that

“the conduct of a party against whom punitive

damages are sought must have a direct nexus to a

specific person who claims to have been damaged by

that conduct.” Further, “[t]he emphasis upon a

subjective analysis of the defendant’s conduct vis-a-

39a

vis a specific plaintiff requires that the defendant’s

conduct be tailored to each plaintiff. That cannot be

accomplished under the existing Case Management

Order.” We reject the circuit court’s application of

Campbell.

Campbell stands for the principle, among others,

that “fa] defendant’s dissimilar acts, independent

from the acts upon which liability was premised,

may not serve as the basis for punitive damages. A

defendant should be punished for the conduct that

harmed the plaintiff, not for being an unsavory

individual or business.” 538 U.S. at 422-23. Notably,

the facts in Campbell were quite extreme. As noted

above, the plaintiffs in Campbell brought what the

Supreme Court characterized as a third-party bad

faith claim against their insurer. In order to show

the reprehensibility of the insurer’s conduct, the

plaintiffs were permitted to introduce evidence of

insurer misconduct that had nothing to do with the

type of misconduct that injured them. “For example,

the Utah Supreme Court [in upholding the verdict in

Campbell] criticized State Farm’s investigation into

the personal life of one of its employees and, in a

broader approach, the manner in which State Farm’s

policies corrupted its employees.” Campbell, 538 U.S.

at 424.

In application of this principle to the instant

case, it is the role of the circuit court to ensure that

the plaintiffs’ evidence is relevant, reasonably

related to the acts upon which liability is premised,

and supports their claim for punitive damages.

Therefore, we find nothing in the circuit court’s

original trial plan that prevents the admission of

evidence that is proper under Campbell.

40a

Another concern raised by the defendants is that

the circuit court’s original trial plan would not

ensure that punitive damages are proportionate to

the injury caused to individual plaintiffs. Again, we

disagree. As noted above, the circuit court’s original

trial plan anticipates that the defendants’ general

liability and a punitive damages multiplier would be

determined in the first trial phase. In the second

phase, compensatory damages would be determined

for each individual plaintiff after individual evidence

is presented. Finally, the punitive damages

multiplier determined in the first phase would be

applied to each plaintiffs compensatory damages

award in order to reach the proper amount of

punitive damages for each plaintiff.

Concerning the proper ratio of punitive damages

to compensatory damages, the Court in Campbell

opined,

we have been reluctant to identify concrete

constitutional lhmits on the ratio between

harm, or potential harm, to the plaintiff and

the punitive damages award. We decline

again to impose a bright-line ratio which a

punitive damages award cannot exceed. Our

jurisprudence and the principles it has now

established demonstrate, however, that, in

practice, few awards exceeding a single-digit

ratio between punitive and compensatory

damages, to a significant degree, will satisfy

due process. In Pacific Mut. Life Ins. Co. v./]

Haslip, [499 U.S. 1 (1991)] in upholding a

punitive damages award, we concluded that

an award of more than four times the

amount of compensatory damages might be

close to the line of constitutional impropriety.

4la

We cited that 4-to-1 ratio again in [BMW of

North America, Inc. v.] Gore, [517 U.S. 559

(1996)]. The Court further referenced a long

legislative history, dating back over 700

years and going forward to today, providing

that sanctions of double, treble, or quadruple

damages to deter and punish. While these

ratios are not binding, they are instructive.

They demonstrate what should be obvious:

Single-digit multipliers are more likely to

comport with due _ process, while still

achieving the State’s goal of deterrence and

retribution, than awards with ratios in range

of 500 to 1, or, in this case, 145 to 1.

Campbell, 538 U.S. at 424-425 (citations omitted).

The defendants below contend that by determining

the punitive damages multiplier prior to determining

individual compensatory damages, there is no way to

ensure the proper ratio between the two. We

disagree.

This Court has recognized the duty of trial courts

to review punitive damage awards. See Bowyer v. Hi-

Lad, Inc., 609 S.E.2d 895, 910 (2004) (stating that

“fijJf a jury awards punitive damages to a litigant, a

circuit court must carefully review the jury’s

verdict”); Garnes v. Fleming Landfill, Inc., 413

S.E.2d 897 (1991) (setting forth the factors for trial

courts to consider when reviewing awards of punitive

damages). In cases like the instant one, we are

confident that once individual compensatory and

punitive damages awards are determined, the trial

court can review each of the awards to ensure that it

42a

comports with the principles articulated in Campbell

and other applicable cases.‘

Therefore, we now hold that the United States

Supreme Court's decision in State Farm v. Campbell,

538 U.S. 408 (2003), does not preclude the

bifurcation of a trial into two phases wherein certain

elements of liability and a punitive damages

multiplier are determined in the first phase and

compensatory damages and punitive damages, based

on the punitive damages multiplier, are determined

for each individual plaintiff in the second phase.

Again, in answering the question certified to us,

we have determined merely that the trial court’s

original trial plan is not violative of Campbell.

Beyond this, we make no judgment on whether the

trial court’s original plan is the best method for

trying the instant tobacco litigation. Further, we

decline to tell the circuit court how to proceed. This

Court has recognized that,

management of [mass tort] cases cannot be

accomplished without granting the trial

courts assigned to these matters significant

flexibility and leeway with regard to their

handling of these cases. A critical component

of that required flexibility is the opportunity

for the trial court to continually reassess and

evaluate what is required to advance the

needs and rights of the parties within the

constraints of the judicial system. Out of this

4 Punitive damages awards should also be assessed by the trial

court in light of this Court's holdings in TXO Prod. Corp. v.

Allvance Res. Corp., 419 S.E.2d 870 (1992), affd, 509 U.S. 443

(1993), and Garnes, supra, and the holding of the United States

Supreme Court in BMW of North America, Inc. v. Gore, supra.

43a

need to deal with “mass litigation” cases in

non-traditional and often innovative ways,

TCR 26.01 was drafted and adopted.

State ex rel. Mobil Corp. v. Gaughan, 563 S.E.2d

419, 424 (2002). Thus, absolutely nothing in this

opinion should be read to limit a trial court's

significant leeway in fashioning a trial plan

appropriate to the specific circumstances of the mass

tort case at issue.

IV.

CONCLUSION

For the reasons set forth above, we answer the

certified question as follows:

Does the Due Process Clause of the Fourteenth

Amendment to the Federal Constitution, as

interpreted by State Farm v. Campbell, preclude a

bifurcated trial plan in a consolidated action

consisting of personal injury claims of approximately

1,000 individual smokers, wherein Phase I of the

trial would decide certain elements of liability and a

punitive damages multiplier and Phase II of the trial

would decide for each plaintiff compensatory

damages and punitive damages based upon the

punitive damages multiplier determined in Phase I?

Answer: No.

Certified question answered.

STARCHER, J., concurring.

I write separately to explain the “mass litigation”

system that underlies the majority’s opinion, and to

state why such a system is necessary. I also write to

explain why the method chosen by the circuit court

44a

to assess punitive damages in this case is

constitutional under the federal and state due

process clauses.

The instant case represents a trial judge

struggling to do precisely what the Rules of Civil

Procedure and the Trial Court Rules told him to do:

to do whatever was necessary “to secure the just,

speedy, and inexpensive determination of every

action.” W.Va.R.Civ.Pro. Rule 1 [1998]. The

defendants, however, contend that a speedy and

inexpensive resolution of the question regarding

whether they should be subject to punitive damages,

for allegedly knowingly marketing a_ defective

product, is contrary to their due process rights under

the state and federal Constitutions. The defendants

assert that the trial court is constitutionally

mandated to deny the plaintiffs a just, speedy and

inexpensive resolution of their claims in order that

the defendants’ property rights may be fully

protected.

The majority opinion properly rejects this

ridiculous position. The defendants are certainly

entitled to due process. But exactly what process is

due is entirely dependent upon the trial judge’s

discretion, and the trial judge’s duty to afford all

parties due process.

In the current age, a single mistake by a product

manufacturer can injure dozens, hundreds, or even

thousands upon thousands of individuals. A few

manufacturers take a callous, deliberate, and

knowing approach and choose to ignore the injuries

caused by their products, or conspire to conceal the

problems with their products. Sometimes, the

injuries caused by the product cover the nation and

span many decades.

45a

The classic example is asbestos. Asbestos is a

rock, a wonderful, flexible, fibrous material that is

mined from the ground and which gives strength and

fire resistance to products. Unfortunately, asbestos is

one of the most toxic substances known to the human

body. When inhaled over a period of time, it can

cause the lungs to form scar tissue that grows and

fills the lungs decades after exposure to asbestos

stops. Even when inhaled into the lungs in minute

quantities, it can cause cancer.

Companies that used asbestos in their products

first started learning about asbestos-related diseases

in the 1910s and 1920s. But rather than warn the

public not to breathe asbestos dust, or stop mixing

asbestos into their products, the companies plowed

ahead and concealed the dangers. It was not until

the 1970s that the government finally took action to

prevent the use of asbestos, and required companies

to put warnings on their products that breathing

asbestos dust was hazardous.

The plaintiffs who filed lawsuits for their

asbestos-related injuries did not sue the defendants

because the products contained asbestos. Instead,

the lawsuits focused on the fact that the products did

not bear labels warning the product’s users of the

dangers of inhaling asbestos fibers. In other words,

these were “failure to warn” product defect cases.

West Virginia, with its many chemical and power

plants, has many thousands of citizens who were

exposed to asbestos dust from the use of asbestos-

containing products in the 1940s through the 1980s.

As a result, many citizens have developed (or are

even just now developing) lung diseases and cancers

directly related to asbestos.

46a

Plaintiffs filed lawsuits in counties across West

Virginia. First there were a few cases in State court,

then a few dozen, then hundreds, then thousands.!

Circuit courts started to try the cases one at a time,

but quickly abandoned that route; trying each case

individually would have required hundreds of years.

The same lawyers and the same witnesses were

employed, using the same documents and

evidentiary exhibits, on a full-time basis in counties

throughout the State.2 Every trial involved weeks of

1 See, e.g., State ex rel. H.K. Porter Co., Inc. v. White, 386

S.E.2d 25, 28 (1989) (“There are presently 114 asbestos-related

personal injury actions pending before the respondent Judge

White in the Circuit Court of Pleasants County. Of more

immediate concern to the petitioner in this case, however, are

ten (10) consolidated cases set for trial on October 23, 1989.”);

Cline v. White, 393 S.E.2d 923, 927 n. 2 (1990) (“According to

records kept by the administrative office of the Court, as of

March 26, 1990, there were 1,605 asbestos claims pending in

West Virginia.”).

2 For instance, in State ex rel. H.K. Porter Co., Inc. v. White,

386 S.E.2d 25 (1989), the Court related the following

circumstances about one lawyer representing one defendant

that manufactured asbestos-containing products:

H.K. Porter Company, Inc. has been a named

defendant in approximately fifteen hundred (1,500)

asbestos-related personal injury lawsuits throughout

West Virginia, as well as sixty thousand (60,000)

similar lawsuits throughout the United States. Since

1981, H.K. Porter Company, Inc. has been represented

by the Auburn, Maine, law firm of Skelton, Taintor and

Abbott. Steven F. Wright has served as Skelton, Taintor

and Abbott's lead counsel in asbestos htigation since

1985, and, as a result, he has appeared in numerous

state and federal jurisdictions in the United States.

In October, 1988, Mr. Wright was retained to represent

H.K. Porter Company, Inc. on a regional basis and he

became responsible for case disposition in Maine, New

Alva

testimony to try the same issues about the same

defendants again and again and again. Virtually

everything pertaining to the defendants remained

the same. The only issues that changed concerned

the plaintiffs, namely the existence and degree of

each plaintiffs injury and damages, which

defendants’ products caused the injury, and the

relative fault of each defendant for the plaintiffs

damages.

This Court recognized that special procedures

were required to address this judicial administrative

nightmare, and the current “mass litigation” system

grew into being.

Starting in the late 1980s, a handful of circuit

judges-myself included-were specially trained in

handling complex, “toxic tort” litigation. Using its

constitutional administrative authority, the Court

transferred asbestos cases from throughout the State

to a handful of counties for these specially-trained

circuit judges to resolve. Once the asbestos cases

were before a single judge, the judge used the

authority provided by Rule 42(a) of the Rules of Civil

Hampshire, Vermont, Massachusetts, Connecticut,

Rhode Island, Puerto Rico, the Virgin Islands, and West

Virginia. The petitioners state that H.K. Porter

Company, Inc. “relies upon Attorney Wright as the

attorney to whom it has given ultimate responsibility

for settlement or trial of asbestos cases in West Virginia

consistent with its nationa! policies and procedures for

defending such cases.

386 S.E.2d at 27-28. The Court further noted that the attorney

had appeared in 1,500 asbestos-related personal injury actions

in West Virginia in twenty-four months, and that “Mr. Wright

included a list of his appearances at six trials in West Virginia

from 1987 to 1989 on behalf of the H.K. Porter Compeny, Inc.”

386 S.E.2d at 28 n. 4.

48a

Procedure [1998] to manage the case. Rule 42

provides, in part:

When actions involving a common question of

law or fact are pending before the court, it

may order a joint hearing or trial of any or all

matters in issue in the actions; it may order

all the actions consolidated; and it may make

such orders concerning proceedings therein

as may tend to avoid unnecessary costs or

delay....

Initially, instead of trying cases individually,

cases with a common theme were grouped together

for trial. The plaintiffs’ cases were first placed in

groups of twenty or thirty for trial. Usually, the

plaintiffs all worked for the same employer or at the

same work site, around the same time periods, and

were therefore usually injured by the same

defendants’ products.

But when the numbers of cases began to reach

into the thousands, judges adjusted their approach.

Several thousand cases were “massed” together into

one proceeding, and through the use of Rule 42, the

cases were broken down into various sub-proceedings

with common issues of law or fact for separate trials.

In run-of-the-mill litigation this Court has

indicated that bifurcation of a case into mini-trials is

generally disfavored. As we stated in Syllabus Point

4 of Sheetz, Inc. v. Bowles Rice McDavid Graff &

Love, PLLC, 547 S.E.2d 256 (2001):

West Virginia jurisprudence favors the

consideration, in a unitary trial, of all claims

regarding liability and damages arising out

of the same transaction, occurrence or

nucleus of operative facts, and the joinder in

49a

such trial of all parties who may be

responsible for the relief that is sought in the

litigation.

However, in mass litigation cases, we have given

trial judges substantial leeway to craft the

procedures necessary to avoid unnecessary costs or

delay. Asbestos cases continued be litigated as

thousands of individual personal-injury claims

against dozens of asbestos-using manufacturers were

filed. The process for managing this litigation

continued to change gradually. For example, by

using Rule 42(a), judges began to bifurcate the

asbestos cases into two separate proceedings. The

first proceeding involved questions of law and fact

that were common as to the defendants; the second

proceeding involved questions common to _ the

plaintiffs.

In the first proceeding, often called the “hability

phase,” one jury would see evidence regarding

common questions of law and fact pertaining to the

defendants.? Experts would testify about the uses of

asbestos, the diseases caused by asbestos, and would

show the jury decades-old documents and discuss

what the various defendants knew about the dangers

of asbestos and when. The primary question for the

3 Actually, at times there was more than one jury. When the

numbers of defendants in a single trial became unmanageable,

the defendant manufacturers were divided into different

courtrooms with different juries. The defendants were grouped

with other defendants with similar characteristics (for instance,

asbestos-using gasket makers or glove manufacturers). The

juries were brought together into one courtroom to hear

evidence common to all defendants-like scientific evidence

about the types of injuries caused by asbestos-and separated to

hear evidence unique to each defendant.

50a

jury to consider was this: considering the state-of-

the-art knowledge of manufacturing in the 1940s,

1950s, 1960s, or 1970s, did each defendant

manufacture a product that was defective because it

failed to come with an adequate warning about the

dangers of inhaling asbestos fibers?

With this first phase of the proceeding, the

plaintiffs and the defendants avoided thousands of

days of courtroom work in individual trials. The

same lawyers were not required to use the same

witnesses to repeatedly retry the same questions. By

trying those questions once for all the plaintiffs, Rule

42(a) permitted a court to avoid “unnecessary costs

or delay”-for both plaintiffs and defendants.

A corollary question addressed by the jury in the

first proceeding concerned punitive damages. If the

defendant actually knew about the dangers of

asbestos in the 1940s, 1950s, 1960s, or 1970s—and

many did—then the jury was asked a_ second

question: did the defendant callously, deliberately or

greedily fail to warn the public of those dangers, and

if so should the defendant be punished for its

actions?

Many of the same witnesses and documents used

to prove that the product was defective were also

used to prove an entitlement to punitive damages.

Both issues overlap and involve the _ actual

knowledge of the defendant. If the defendant knew

the product was inherently dangerous for its

intended use, the product was defective. Likewise, if

the defendant knew that the product was inherently

dangerous for its intended use, and knew that the

product was causing harm to individuals, and the

defendant recklessly or deliberately kept marketing

5la

the defective product—well, that’s grounds for

punitive damages.

Juries in the first proceeding could easily

determine, yes or no, whether punitive damages

should be assessed against a defendant. The problem

in the first proceeding was with fixing the actual

dollar amount of punitive damages. Since the first

phase jury knew nothing of the degree of injury or

specific financial circumstances of each of the

thousands of plaintiffs, the jury could not

knowledgeably determine what dollar amount of

punitive damages would be fair for each plaintiff.

It is axiomatic that punitive damages must bear

a “reasonable relationship” to the potential of harm

caused by the defendant’s actions. Syllabus Point 1,

Garnes v. Fleming Landfill, Inc., 413 S.E.2d 897

(1991). To meet this’ reasonable _ relationship

requirement, we indicated in Syllabus Point 3 of

Garnes that juries must be instructed using the

following language:

Punitive damages should bear a reasonable

relationship to the harm that is likely to

occur from the defendant’s conduct as well as

to the harm that actually has occurred. If the

defendant's actions caused or would likely

cause in a similar situation only slight harm,

the damages should be relatively small. If the

harm is grievous, the damages should be

greater.

Judges dealing with asbestos cases determined

that the mandate of Garnes could be met by letting

the jury in the first phase assess a “punitive damage

multiplier.” The jury was asked to calculate a

multiplier such that the final dollar amount of

52a

punitive damages paid by the defendant would bear

a reasonable relationship to the harm that was likely

to occur from the defendant’s conduct as well as the

harm that actually occurred. The punitive damage

multiplier would be used in the second phase to

multiply the amount of the plaintiffs compensatory

damages to actually determine the dollar amount of

the defendant’s punitive damage liability.

In the second phase proceeding, questions of law

and fact common to the plaintiffs would be resolved.

The plaintiffs’ cases would be broken down-into

groups by the plaintiff's asbestos-related disease or

by the plaintiff's work place, or even individually-and

juries would hear evidence unique to each plaintiff.

For instance, medical experts would discuss whether

or not the plaintiff had an injury, and whether that

injury was caused by asbestos. Economic experts

would discuss the plaintiffs loss. Other experts

would present evidence concerning the particular

asbestos products that caused the plaintiffs injuries.

The second, “individual issues” or “damage

phase” trials would begin with a brief statement to

the jury by the lawyers about what happened in the

first, “liability phase” trial. The juries would be

instructed by the judge that the defendant’s product

was defective; the jury would only be charged with

sorting out whether the defendant’s product caused

the plaintiffs injury, and the amount of the

plaintiffs compensatory damages.

After the trial was complete, the judge would

take the punitive damages multiplier determined in

the first trial, multiply the plaintiffs compensatory

damages by that multiplier, and thereby know the

dollar amount of the punitive damages due and

Owing to the plaintiff. Furthermore, the judge would

53a

then conduct a post-trial review of the punitive

damages award to ensure that the award was

constitutionally fair and reasonably related to the

harm that the defendant caused and could have

caused to the plaintiff.4

By the mid-1990s, this Court recognized that

other individual personal-injury actions’ with

characteristics similar to asbestos were being filed.

The Court therefore took steps to codify the

procedures that evolved in the context of asbestos

litigation.

4 As we stated in Syllabus Point 4 of Garnes:

When the trial court reviews an award of punitive damages, the

court should, at a minimum, consider the factors given to the

jury as well as the following additional factors:

(1) The costs of the litigation;

(2) Any criminal sanctions imposed on the defendant for his

conduct;

(3) Any other civil actions against the same defendant, based on

the same conduct; and

(4) The appropriateness of punitive damages to encourage fair

and reasonable settlements when a clear wrong has been

committed. A factor that may justify punitive damages is the

cost of litigation to the plaintiff.

Because not all relevant information is available to the jury, it

is hkely that in some cases the jury will make an award that 1s

reasonable on the facts as the jury know them, but that will

require downward adjustment by the trial court through

remittitur because of factors that would be prejudicial to the

defendant if admitted at trial, such as criminal sanctions

imposed or similar lawsuits pending elsewhere against the

defendant. However, at the option of the defendant, or in the

sound discretion of the trial court, any of the above factors may

also be presented to the jury.

54a

In 1999, the Court adopted Trial Court Rule

26.01, formalizing the “mass litigation” system. Rule

26.01 created a “Mass Litigation Panel” consisting of

six judges, and empowered the Panel to resolve any

“mass litigation” case that the Chief Justice of this

Court referred to the panel.5 Essentially, the judges

on the Panel are the specially trained judges who are

ready and willing to take on cases with common

questions of law or fact where large numbers of

individuals have potentially been harmed, physically

or economically, as a result of a catastrophe or as a

result of a defective product.

The trial judge in the instant case has been an

active participant on the Panel, and has aggressively

worked to resolve mass litigation cases. In the

5 Rule 26.01(c) defines “mass litigation” thusly:

“Mass litigation” shall be defined as two (2) or more civil actions

pending in one or more circuit courts: (a) involving common

questions of law or fact in mass accidents or single catastrophic

events in which a number of people are injured; or (b) involving

common questions of law or fact in “personal injury mass torts”

allegedly incurred upon numerous claimants in connection with

widely available or mass-marketed products and _ their

manufacture, design, use, implantation, ingestion, or exposure;

or (c) involving common questions of law or fact in “property

damage mass torts” allegedly incurred upon numerous

claimants in connection with claims for replacement or repair of

allegedly defective products, including those in which claimants

seek compensation for the failure of the product to perform as

intended with resulting damage to the product itself or other

property, with or without personal injury overtones; or (d)

involving common questions of law or fact in “economic loss’

cases incurred by numerous claimants asserting defect claims

similar to those in property damage circumstances which are in

the nature of consumer fraud or warranty actions on a grand

scale including allegations of the existence of a defect without

actual product failure or injury.

55a

instant case, it appears that he adopted the two-

phase trial model that was used by judges in

asbestos cases.

The defendants, however, insist that the

bifurcation of these cases is improper. The

defendants argue that they are entitled, pursuant to

the due process clauses of the State and federal

Constitutions, to try the question of punitive

damages one case at a time, so that the jury can

assess each defendant’s culpability to each plaintiff

individually. The defendants insist that the only way

punitive damages may be reasonably related to the

potential harm caused to an individual plaintiff is by

a jury hearing evidence about both a defendant’s

conduct and the actual or potential harm to the

plaintiff at the same time. In sum, the defendants

assert that punitive damages can never be assessed

in a “mass” litigation under Rule 42(a), or for that

matter in a class action under Rule 23.

The inherent flaw with the defendants’ argument

is the assumption that due process, particularly to

protect property rights, is a concrete concept.

Instead, what process is due under the due process

clause is determined under a sliding scale, and

changes with the facts of each case. “When due

process applies, it must be determined what process

is due and consideration of what procedures due

process may require under a_ given set of

circumstances must begin with a determination of

the precise nature of the government function

involved as well as the private interest that has been

impaired by government action.” Syllabus Point 2,

Bone v. W.Va. Dept. of Corr., 255 S.E.2d 919 (1979).

“(D)ue process is flexible and calls for such

procedural protections as the particular situation

56a

demands.” Morrissey v. Brewer, 408 U.S. 471 (1972).

Necessarily implicit in the above quote, which was

also expressed in Mathews v. Eldridge, 424 U.S. 319

(1976), is the principle that due process issues must

be decided on the facts of the particular case. Once it

is determined that due process applies, the question

to be answered is “What process is due?”

The courtroom process that is due someone who

has a few parking tickets is different from the

procedural protections duc a shoplifter, and vastly

different from the process to be accorded someone

who is accused of murder. And the due process

protections for someone accused of a single murder

are going to be different from someone accused of

being a mass murderer, like Herman Goering or

Saddam Hussein. Likewise, the amount of process

that is due in a criminal case, where persona! liberty

or life is at stake, is different from the process that is

due in a civil case, where only property interests are

at stake.

The defendants argue that State Farm v.

Campbell, 538 U.S. 408 (2003), mandates that all

evidence of punitive damages must be presented to

the jury and heard in relation to the injury caused to

each specific plaintiff. Ignoring the fact that

Campbell involved one defendant who had caused

harm to a husband and wife in one instance (and not

dozens of defendants who caused harm to thousands

of plaintiffs over several decades), the defendants

argue that Campbell preempts West Virginia's

system of mass litigation. The inevitable result of

accepting the defendants’ argument is that it creates

a judicial administrative nightmare. The same

lawyers would be working for years, probably

decades, to present the same witnesses to testify

57a

using the same documents in each _ separate

plaintiffs case.

If the majority opinion had accepted this

reasoning by the defendants, we would essentially be

saying that the more people a defendant injures with

its defective product, the less likely the defendant is

ever going to have to pay compensatory or punitive

damages to the people injured by the product. The

defendant would therefore be accorded a right to

thousands upon thousands of individual trials that

would cause the legal system to grind to a halt. At

the same time, we would be telling the individual

plaintiffs that they have no rights to any proccss-

because of administrative gridlock, the individual

plaintiffs would de facto be denied their day in court.

The majority opinion rightly rejected this position. -

As the members of this Court have noted before,

State Farm v. Campbell presented no new law in the

field of punitive damages. The case was nothing

more than a summary, a collation, of prior case law.

See Boyd v. Goffoli, 608 S.E.2d 169 (2004) (Davis, J.,

concurring) and (Starcher, J., concurring); Jackson v.

State Farm Mut. Auto. Ins., 600 S.E.2d 346 (2004)

(Davis, J., concurring) and (McGraw, -/., concurring).

The due process protections mandated by State

Farm v. Campbell and its predecessors are, as the

majority opinion indicates, encompassed in the trial

plan which the circuit court initially adopted. The

first phase trial permits a jury to examine a

defendant's relevant misconduct, and determine

whether punitive damages should be assessed. If the

jury believes that punitive damages are warranted,

then the jury also determines a punitive damages

multiplier that establishes a numerical relationship

between the potential harm of a defendant’s conduct

58a

and each plaintiffs compensatory damages. In the

second phase proceeding, the trial judge actually

multiplies the plaintiffs actual compensatory

damages by the multiplier and establishes a punitive

damages dollar figure. The circuit judge is then

obligated by Garnes to review the punitive damages

award to assess its fairness under the circumstances.

Under this process, thousands of allegedly

injured plaintiffs will be permitted their day in court.

The defendants will be permitted, in one proceeding

instead of thousands, to contest the plaintiffs’ claim

that the defendants should pay punitive damages.

And, if the trial judge determines this is the best

course to take, the plaintiffs and the defendants will

have secured the just, speedy, and inexpensive

determination of every action.

I therefore concur in the majority’s decision.

BENJAMIN, J., concurring.

I write separately to emphasize not only what

the Court’s opinion does, but also what it does not do.

This unanimous opinion answers a narrow question

in a narrow manner. It does no more. It does no less.

I think it important to underscore the essence of

the Court’s opinion:

After carefully considering the parties’

arguments and the Supreme Court’s decision

in Campbell, this Court finds that Campbell,

which did not involve mass tort litigation,

does not per se preclude the circuit court’s

original trial plan. We emphasize that the

question before this Court is a narrow one.

Accordingly, our answer is strictly limited to

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this narrow question.'!° Our response is

limited to the issue of whether State Farm v.

Campbell precludes a bifurcated trial plan

like the one below. Further, we do not

address whether there may be other legal

reasons to question the circuit court's

bifurcated trial plan. Nor do we, or indeed

can we, address in the abstract the specific

evidence that may be presented on the issue

of reprehensibility. Our conclusion in this

case simply is, first, we find nothing in

Campbell that mandates a reexamination of

our existing system of mass tort litigation.

Second, we find nothing in Campbell that per

se precludes a bifurcated trial plan in which

a punitive damages multiplier is established

prior to the determination of individual

compensatory damages. Beyond this, we

leave more specific issues for another day....

In this passage, the Court emphasizes the

narrowness with which it approached and answered

the certified question. In addition to twice stating

that Campbell does not “per se ” (by or in itself)

preclude the circuit court's original trial plan, the

Court twice specifically restricts its answer to the

10 The certified question from the Circuit Court of Ohio County

being:

Does the Due Process Clause of the Fourteenth Amendment to

the Federal Constitution, as interpreted by State Farm v.

Campbell, preclude a bifurcated trial plan in a consolidated

action consisting of personal injury claims of approximately

1,000 individual smokers, wherein Phase I of the trial would

decide certain elements of liability and a punitive damages

multiplier and Phase II of the trial would decide for each

plaintiff compensatory damages and punitive damages based

upon the punitive damages multiplier determined in Phase |?

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certified question, stating that we are ~“... not

address[ing] whether there may be other legal

reasons to question the circuit court’s bifurcated trial

plan” and “[nJor do we, or indeed can we, address in

the abstract the specific evidence that may be

presented on the issue of reprehensibility.” These

limitations merit attention.

Plaintiffs and defendants differ greatly herein on

their views of the scope and commonality of the

evidence of reprehensible conduct which may

warrant consideration of punitive damages.

Plaintiffs appear to contend that the evidence of

reprehensible conduct is the same and applicable to

all plaintiffs. In their amended brief, plaintiffs claim

that all 1,000 of them “were harmed, not just by

similar conduct, but by the exact same conduct-

namely, defendants’ fraudulent concealment of the

known hazards of smoking.” Thus, plaintiffs argue

that this evidence is suitable for determining a single

punitive damage multiplier for all of them. Since

plaintiffs were all harmed by the same alleged

conduct of defendants, plaintiffs contend that the

trial court need not be concerned with similar and

dissimilar conduct and that the jury, on the basis of

this common reprehensible conduct, may apply one

punitive damage multiplier to whatever

compensatory damages may be _ subsequently

awarded.

Defendants, on the other hand, contend that the

evidence is diverse with no sameness applicable to

all plaintiffs. Defendants therefore contend that such

evidence is unsuitable for determining a single

punitive damage multiplier fitting to all claimants.

They claim in their response that plaintiffs have not

limited their damages claim to recovery for

6la

fraudulent concealment, but also that plaintiffs seek

recovery “for negligence and strict liability in the

design, manufacture, and warning labels of

cigarettes; strict liability in selling an unreasonably

dangerous product; negligence in testing and

researching; and negligence in their advertising and

in the sale of cigarettes to minors.” Among other

arguments, defendants contend that (1) evidence of

concealment or failure to warn cannot be a basis of

punitive damages for individual plaintiffs who were

fully aware of the risks of smoking or of the facts

supposedly concealed; (2) evidence relating to

addiction cannot be a basis of punitive damages for

individual plaintiffs who are not addicted; (3)

evidence of misconduct in the 1950s or 1960s cannot

be a basis of punitive damages for individual

plaintiffs who didn’t start smoking until the 1970s or

1980s; (4) evidence relating to light cigarettes cannot

be a basis of punitive damages for smokers of

unfiltered cigarettes; and (5) evidence relating to a

particular defendant against whom a plaintiff is

pursuing no claim should not be a basis for that

individual plaintiffs punitive damages. Thus,

defendants claim, a plaintiff could obtain (and some

defendants could pay) punitive damages set by the

application of a multiplier that was based on the

misconduct of companies that those plaintiffs did not

sue or on alleged reprehensible conduct of a

defendant which is not even applicable to the specific

plaintiff.

In responding to certified questions rather than

in considering issues raised on properly perfected

appeals, this Court necessarily lacks the intimate

knowledge which the trial level circuit court has of

all facets of the litigation below. We do not have a

full and complete record before us in a consideration

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of a certified question. We therefore cannot, and

indeed should not, in my opinion, determine whether

all plaintiffs were harmed by the exact same conduct,

as the plaintiffs contend, or, if harmed at all,

whether plaintiffs were harmed by diverse conducts

of different defendants, the products of which all

plaintiffs did not smoke, as the tobacco companies

claim. Nor has the Court done so in its answer to the

certified question. The Court’s opinion does not

discuss the divergent views of the parties with

respect to the evidence of reprehensible conduct. Nor

has the Court expressed a view on which conducts on

the part of the defendants are similar and which are

dissimilar. Without such factual determinations

having first been made, daunting and complex as

that process may ultimately prove to be, this Court is

in no position, in my opinion, to say ultimately

whether Campbell's restricted view on evidence of

reprehensibility, and the constitutional

considerations which underlie such a view, would

sanction a punitive damages multiplier as the circuit

court’s original two-phase trial plan envisioned.

Judge Recht apparently thinks not, and I, for one,

am in no position to disagree with him. Nor, as I read

it, does the Court’s opinion. In limiting its answer

herein, the Court states that “[bJeyond [our limited

response], we leave more specific issues for another

day’; that “[m]atters such as a matrix and the use of

a punitive damages multiplier, given the unresolved

nature of the use of such mechanisms, can be better

addressed by this Court upon appeals taken from

final orders” quoting State ex rel. Mobil Corp. v.

Gaughan, 563 S.E.2d 419, 426 (2002); and, most

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importantly, that “we decline to tell the circuit court

how to proceed”.!!

There is yet another significant sentence in the

Court’s opinion which I believe needs emphasis:

“[W]e do not address whether there may be other

legal reasons to question the circuit court’s

bifurcated trial plan.” Although not recently, this

Court has said on many occasions that:

Punitive damages should not be awarded in

any case where the amount of compensatory

damages is adequate to punish _ the

defendant; and, in a case where such

compensatory damages are not adequate for

the purpose of punishment, only such

additional amount should be awarded as,

taken together with the compensatory

damages, will sufficiently punish the

defendant.

Syl. Hess v. Marinari, 94 S.E. 968 (1918). Accord,

Mayer v. Frobe, 22 S.E. 58, 63 (1895), Fisher v.

'! West Virginia is not alone in its concerns regarding the need

for an efficient, yet procedurally proper, litigation of mass and

complex civil cases. There may well be no “best” procedure for

dealing with such cases in view of the differing nature of such

cases. From my albeit limited research, I find that a number of

jurisdictions have moved away from the type of trial plan

originally proposed below, and I find no jurisdictions which

have recently embraced such a plan. See, e.g., Liggett Group

Inc. v. Engle, 853 So.2d 434, 451-2 (Fla. Ct. App. 2003), appeal

granted, 873 So.2d 1222 (Fla. 2004); Philip Morris, Inc. v.

Angeletti, 752 A.2d 200, 249 (Md. 2000); Southwestern Ref. Co.

v. Bernal, 22 S.W.3d 425 (Tex. 2000); Smith v. Brown &

Williamson Tobacco Corp. 174 F.R.D. 90, 97 (W.D. Mo. 1997).

Whether this points to the presence of a trend that such a type

of trial plan is now generally disfavored in the United States is

not currently before this Court.

64a

Fisher, 108 S.E. 872, 874 (1921); and Raines v.

Faulkner, 48 S.E.2d 393, 399 (1947).

The principle of stare decisis is a fundamental

foundation of our system of jurisprudence. It is the

source of the predictability, balance and stability in

the legal sy

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