Cornered (41 page)

The tobacco companies had argued that the number of smokers involved—tens of millions from all over the country—each needing individual medical diagnosis for alleged nicotine dependence, could not possibly fit the conditions of predominance and superiority. Differences in state laws apart, it should be clear that nicotine addiction, or habituation, or whatever you want to call it, varied greatly from one person to another. Even if a trial decided that nicotine was an addictive substance, each individual would have to prove nicotine addiction and that would clog up the courts for decades.

But Judge Jones decided to be creative and, as he put it, “look forward and invent” a way to process the claims as a class. Essentially, he split the lawsuit into two parts. The first would be a single trial of the claim that nicotine was addictive and that the tobacco companies had fraudulently failed to inform smokers of this fact, despite their possession of such knowledge. If the tobacco companies won that trial, the suit would be over. If they lost, Judge Jones envisioned a second series of trials to assess potential damages, but he took the option, which Rule 23 provides, of deciding how those second trials would be managed after the resolution of the first one. This was a progressive reading of the rules from a liberal judge, and the tobacco companies pounced on it and appealed immediately. A hearing on the appeal was set for April 2, 1996—a week after Texas became the seventh state to file a Medicaid case.

As the lawyers prepared their appeal arguments, Judge Jones died suddenly from leukemia. Although he would not have been involved in the appeal, his death seemed a bad omen for the Castano camp. The hearing was to be before three judges of the Fifth Circuit: Jerry Smith and John Duhe, both Reagan appointees, and Harold DeMoss, appointed by President Bush. Most legal experts, and the Castano lawyers themselves, assumed they would be bound by recent negative trends in class-action rulings.

One such class action in Chicago was particularly relevant. It involved 10,000 hemophiliacs who had been infected by the AIDS virus through blood transfusions. Nearly 2,000 had died of AIDS. The hemophiliacs formed a class action and sued the five national drug companies that had supplied blood-clotting additives. They claimed that the companies knew the product was contaminated with HIV. The lower court had suggested the same procedure that Judge Jones had recommended for Castano—a two-step trial. In the first, a jury would determine whether the drug companies had been negligent; if so, the class action would be allowed to pursue individual claims for damages in separate trials. The drug companies appealed.

The Seventh Circuit rejected the class action. In the decision, Judge Richard Posner said the issues of negligence could not be decided in a class action because the hemophiliacs came from all over the country and the fifty states have different laws governing negligence; as such, it would be impossible to adopt a single legal standard for the class. In other words, questions of law did not “predominate” throughout the class. The tobacco companies seized on Posner's argument and would use it against Castano in their appeal.

When the hearing opened, the federal courtroom on Poydras Street in downtown New Orleans was packed with more than a hundred and fifty lawyers, reporters, and Wall Street analysts. The media examination of the industry had been in full cry for months, and tobacco stocks had been reacting wildly to every tidbit of information—a new, embarrassing document, additional states suing for Medicaid costs, or rumors of more tobacco industry whistle-blowers. Roy Burry, an analyst for Oppenheimer & Company, observed, “There are billions of dollars at stake here. Everyone is reading the tea leaves.” The tobacco stock analyst Gary Black could no longer contain his contempt for the Castano lawyers and declared, “It's a wonderful day. It's a very conservative panel. It dramatically increases the odds that Castano will go away.”

The industry was defended by Kenneth Starr, a former U.S. solicitor general and the Whitewater independent counsel. Starr had been criticized for accepting the brief. How could he work for the tobacco industry and investigate alleged wrongdoings by an antitobacco president? asked his critics. Surely there was a conflict of interest? Not at all, said the confident Mr. Starr, who was an old tobacco industry campaigner. He had been counsel for Brown & Williamson in 1994 when they issued subpoenas against Congressmen Waxman and Wyden over the leak of the Merrell Williams documents. He had lost that battle in a Democratic Congress, but in New Orleans he was sure of victory. Gauthier was in the corridors, building up confidence among the Castano group. But even he looked nervous.

Starr walked into the court smiling, a noticeable spring in his step as he greeted the usual band of thirty or so industry lawyers. They looked less tense than the last time they had been in New Orleans for the certification hearing in December 1994. They seemed to smell a victory. Starr launched into a barrage against the Castano action. It was an “an extremely novel claim,” he told the three-judge panel, a claim which had not been properly tested in the courts and was therefore unworthy of a class action. “This case is woefully premature,” he argued, “and [the claims] so overwhelmingly individualized that it should collapse.”

As to the matter of alleged nicotine addiction, Starr said, “The very concept of addiction is complex. It is elusive with definitions [of addiction] shifting over the decades covered by the complaint.” Moreover, nicotine addiction was so overwhelmingly individualized that the whole idea of nicotine addiction as a cause of legal action should be tested in state courts before entertaining any thoughts of a national class action.

Elizabeth Cabraser, the petite San Francisco attorney with an encyclopedic command of class actions, argued the case for Castano. Cabraser's central point was disarmingly simple. This case was about “fraudulent statements” from the industry. Such a charge was amply supported by new evidence, she said. Taking Starr's objection that the claim of addiction was a “novel claim,” she said, “Our claim is not a new claim in law. It's a fraud claim. What's novel about the claim is the facts that support it: facts that smokers in traditional trials have not had before, facts which were known to the defendants and were suppressed, and facts that have begun to emerge within the last two years.”

Unwieldy though the class action was—tens of millions of addicted smokers, perhaps—Cabraser argued that Judge Jones had selected an appropriate two-step method of dealing with the cases. There was nothing in Judge Jones's certification that suggested there would have to be multiple trials in many jurisdictions. On the contrary, Judge Jones had deliberately deferred what happened “down the road not taken” until after the trial to establish whether nicotine was addictive and whether the companies had covered up that fact.

The Fifth Circuit judges were clearly not impressed by Cabraser's position. They were preoccupied with the problems posed by nicotine addiction and by the varying laws governing negligence in the fifty states. Was Castano not “so complex and individualized” as to be unworkable? they asked. Had Judge Jones not been “cavalier” in his treatment of its complexities down the road? Judge Duhe, himself a former smoker, thought that “considerably more analysis should have been presented” by Judge Jones on the issue of how to conduct the second trials.

The Fifth Circuit's ruling came sooner than expected, but the findings were not a surprise. On May 23, the panel reversed Judge Jones's certification. In a thirty-six-page opinion, the three judges agreed that variations in state law were too great—they adversely affected the conditions of “predominance” and “superiority.” They agreed with Starr that nicotine addiction as a cause of action needed to be tested in state courts before creating a national class. The addiction theory was too novel, said Judge Smith, who then took one extra step. He called the nicotine addiction claim an “immature” tort, which he defined as one that lacks a “prior track record of trials from which the district court can draw the information necessary to make the predominance and superiority analysis of Rule 23.”

This incensed Cabraser. In a paper for the American Bar Association, she would counterattack. In calling addiction an “immature tort” requiring experimentation in many trials, the judges, said Cabraser, had suited the tobacco companies' “interests and preferences admirably.” It played directly into the industry's legal strategy of wearing down the opposition. A single plaintiff was likely to find the cost of litigating an addiction claim so much greater than the prospective award as to be of “negative value.” It would cost much more than could possibly be gained in damages. Therefore, the plaintiff would be deterred from taking action. This had been the experience of the First and Second Waves of tobacco litigation. Cabraser concluded that scientific-sounding concepts such as that of “immature tort” were in fact attractive “catch phrases” that were “largely unsupported by any widely accepted body of evidence or jurisprudential consensus. In short, immature tort is an immature concept.”

The
Harvard Law Review
agreed. Judge Smith's adoption of the maturity test was “decidedly premature,” said the
Review.
“More importantly,” it concluded, “Judge Smith's ability to subsume his distaste for novelty within the ostensibly objective maturity label raises the concern that judges may use the maturity test to implement their personal beliefs about the appropriateness of the class action.” That was Cabraser's point, too.

Concluding her attack, she said that it appeared, “at least to the ‘losing side,' as essentially a value judgment, in which one court's view of the merits of the case has become inextricably entangled with the neutral procedural principles of Rule 23.”

The companies were jubilant and used the Fifth Circuit decision to castigate the liability lawyers. R. J. Reynolds said the rejection of Castano sent “a strong message that class actions created by entrepreneurial plaintiffs' lawyers will not be accepted by the courts”; Brown & Williamson said the signal was clear: “Stop the insanity in our nation's courts”; the ruling had declared “loud and clear to those who would twist the process to their own advantage that the line, indeed, had been drawn.” Wall Street was happy, as well. “The class-action risk is gone,” declared Gary Black.

*   *   *

A
FTER THE
F
IFTH
C
IRCUIT DECISION
, the tobacco companies no doubt hoped that Castano would die: that Gauthier's stunts would end and that the last had been heard from John Coale, Stanley Chesley, Ron Motley, and the others. But the Castano consortium had $2.2 million on hand and $1.5 million coming in every three months from the sixty law firms involved. Expecting to be turned down by the conservative Fifth Circuit, Gauthier and his colleagues had already prepared a contingency plan. They started to file “son of Castano” cases in every state in the nation. The Third Wave's oracle, Professor Daynard, forecast it would be like the Sorcerer's Apprentice—break one broom and two more appear, and then four and then sixteen and so on. Indeed, within five days, two such cases were filed—one in Louisiana and another in Maryland. Two months after the Fifth Circuit decision, there were seven such cases, including the District of Columbia, Indiana, Mississippi, New Mexico, and New York.

These cases would not recapture the media magic of the early Castano days; filing lawsuits in state courts is an uphill struggle, opposed at every turn by the industry. Gauthier held the line, even so. When the antitobacco forces massed in the spring of 1997 to negotiate a so-called global settlement with the industry, Gauthier, Stan Chesley, John Coale, and Russ Herman were all there, fighting for compensation for the nicotine addicted smokers of America—and, of course, for their attorneys' fees. Ron Motley, the wild card in the Third Wave, would leave the Castano camp and become a leader of the mass offensive of the thirty-nine states suing the industry for Medicaid costs. As such, he would play a key role in the end game the attorneys general played in the summer of 1997.

14

THE MAN ON THE PINK BICYCLE

Somebody needed to take these people on. A lot of people are dying of cancer.

—
Grady Carter, August 9, 1996

 

It's hard for me to understand why this hasn't occurred sooner.

—
Samuel Gaskins, retired postal-service supervisor and foreman of the Florida jury that found Brown & Williamson guilty of negligence

 

T
HE PHONE CALL
from the courthouse came in midafternoon. The jury had reached a verdict. On any other such day, Woody Wilner, a winsome, middle-aged lawyer in Jacksonville, Florida, might have mounted his shocking pink bicycle, stashed his court papers in the front basket, and peddled the four blocks, mostly downhill, from his law office to the Duval County Circuit Court. He had made this journey hundreds of times in the last twenty years. But August 9, 1996, would be different. Wilner's career was at a turning point; so was the Third Wave of tobacco litigation.

The jury had been deliberating for more than a day on a claim for damages by Wilner's client, Grady Carter, against the tobacco company Brown & Williamson. Carter, a retired air traffic controller, had lost the upper lobe of his left lung to cancer after smoking for forty years. It was the first tobacco case of the Third Wave to come to trial; the first time the Merrell Williams documents had been used in evidence, and it was Woody Wilner's first-ever cigarette lawsuit. Wilner thought he had presented his case well. The jury seemed to have understood the issues and was not obviously inclined one way or the other. The judge had been fair, and Florida's consumer laws were on his side. Even so, Wilner remained deeply respectful, even fearful, of the unbeaten record of the tobacco industry. He rated his chances of winning at only a little higher than fifty-fifty. As befit the seriousness of the occasion, Wilner left his bicycle at the office and drove to the court with Carter and his wife, Mildred.