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A former smoker who had both of his legs amputated due to circulation problems has lost his $15 million punitive damages award against R.J. Reynolds Tobacco Co. after the 10th Circuit said Kansas law does not recognize claims for fraudulent concealment against a tobacco company.
David Howard, a spokesman for R.J. Reynolds, said the company is pleased the three-judge panel agreed unanimously to throw out the punitive damages award. He said the U.S. Court of Appeals for the 10th Circuit acted appropriately in finding that plaintiff David Burton's claim for fraudulent concealment should not have proceeded under Kansas law.
Although the 10th Circuit reversed the claim that led to the punitive damages award, the panel upheld the rest of Burton's claims -- for failure to warn and failure to test -- and the resulting $200,000 in compensatory damages. His attorney was also pleased with the ruling.
"This is one of the most favorable [opinions] in any tobacco case" for plaintiffs, said Kenneth B. McClain of Humphrey, Farrington & McClain.
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Just days after a Jackson County jury awarded $22 million to a deceased smoker's family, a federal appeals court threw out a $15 million verdict Wednesday in another tobacco case.
Reversing the trial judge's award of punitive damages, a three-judge panel of the 10th U.S. Circuit Court of Appeals held that Kansas City, Kan., resident David Burton failed to prove that the defendant, R.J. Reynolds Tobacco Co., had engaged in "fraudulent concealment" under Kansas law.
The court, however, upheld the jury's award of nearly $200,000 in actual damages based on Reynolds' failure to warn of tobacco's dangers. . . .
Edward Sweda Jr., senior attorney with the Tobacco Products Liability Project in Boston, an anti-smoking group, said the 10th Circuit's ruling in Burton was limited to Kansas and was unlikely to have an adverse impact on punitive-damage awards in tobacco cases in other states.
"Had the court allowed the punitive damages but scaled it way back, that would have had a worse influence on other cases," he said.
A federal appeals court on Wednesday threw out a $15 million punitive damages award to a lifelong smoker who sued R.J. Reynolds Tobacco Co. after losing his legs from a cigarette-related illness.
But the Tenth U.S. Circuit Court of Appeals, in a split decision, left intact a Kansas jury's compensatory damages of $196,416, finding the cigarette maker failed to warn David Burton of the dangers of smoking.
The jury also awarded $1,984 in compensatory damages, but no punitive damages, against Brown & Williamson Tobacco Corp. The two companies merged last summer, forming a new company, Reynolds American Inc .
It's said a picture is worth a thousand words, and Denver lawyers are finding the courtroom is no different.
That's why more of them are turning to companies such as Denver-based Visual Advantage, which provides visuals and electronic presentations for law firms.
From scanning documents and presenting highlighted pieces to jurors to choosing colors for displays to elicit a certain emotional response, the company says its products help win cases and reduce lawyers' time in court. . . .
Among the cases in which Visual Advantage has been on the winning side: a 2002 judgment in which David Burton was awarded $15 million in punitive damages from R.J. Reynolds Tobacco Co. The case was filed for injuries Burton claimed to have sustained from smoking Camel cigarettes for more than 40 years, causing him to develop peripheral vascular disease. He ended up having both his legs amputated as a result of the disease.
Visual Advantage created animation that broke down a complex medical process, showing how smoking led to circulation problems.
Visual Advantage also uses what's called presentation software, where documents are scanned and can be searched by title or even keywords. During trial, instead of shifting through boxes of evidence for a single piece of paper, the information can be pulled up electronically, projected on a screen and highlighted for witnesses and jurors.
After David Burton's decades of smoking required his legs to be amputated in 1993, a Kansas jury awarded him $200,000 for medical costs and lost income and a judge ordered the R.J. Reynolds Tobacco Co. to pay him $15 million in punitive damages.
The 69-year-old former janitor never collected the millions, which are now the subject of a dispute before the Denver-based 10th U.S. Circuit Court of Appeals that could affect the size of punitive damages in federal courts nationwide. . . .
The $15 million in punitive damages ordered by a Kansas judge in 2002 is 75 times Burton's compensatory damages. The tobacco company's lawyers contend that violates a U.S. Supreme Court ruling last year that punitive damages shouldn't be vastly more than compensatory damages.
But the nation's high court didn't say how much more punitive damages could be. The ruling, however, suggested that "single digit" ratios - punitive damages less than 10 times the compensatory damages - might be more acceptable.
Three 10th Circuit judges heard oral arguments on the issue Monday in Denver.
One of the nation's most divisive legal debates is expected to be taken up in Denver today, when the 10th U.S. Circuit Court of Appeals considers whether a federal judge in Kansas should have assessed $15 million in punitive damages against two cigarette manufacturers in 2002.
The lawsuit, filed in Kansas by retired janitor and lifelong smoker David Burton, was the first product-liability lawsuit against tobacco companies to succeed in federal court.
It is also thought to be the first time a judge, instead of a jury, awarded punitive damages in a tobacco lawsuit.
Now, the suit is expected to become an important test case in the ongoing national controversy over whether there should be a federal limit on punitive damages.
A federal appeals court heard oral arguments on Monday on whether a $15 million punitive damage award against R.J. Reynolds Tobacco Holdings Inc. should be scaled back.
While the $15 million figures pales in comparison to other judgments, the issue is whether the amount was too great because it far outweighed the $200,000 figure awarded in compensatory judgment to David Burton, a lifelong smoker.
The R.J. Reynolds Tobacco Co. asked a federal appeals court Monday to toss out a $15 million judgment awarded to a Kansas smoker in a case experts say is unusual because the punitive damages were calculated by a judge, not a jury.
Arguing before a three-judge panel of the 10th U.S. Circuit Court of Appeals, Robert Klonoff said the judge awarded David Burton far too much money after concluding R.J. Reynolds fraudulently concealed information under a law that didn't apply in Kansas.
"There is not one shred of evidence that the punitive damages related to the alleged misconduct in Kansas," Klonoff said.
Burton, 69, sued R.J. Reynolds and the American Tobacco Co. in 1995, saying the companies knew from the early 1950s that cigarettes were addictive and dangerous, but kept the knowledge secret for financial reasons. . . .
A few months later, U.S. District Judge John Lungstrum awarded Burton $15 million, saying the tobacco company's concealment of how addictive cigarettes are was "particularly nefarious." . . .
Project attorney Edward Sweda said that was significant because a judge's ruling could carry more weight on appeal than a jury's determination of damages.
A $15 million award to a double-amputee would punish Camel cigarette-maker R.J. Reynolds only if the company loses on appeal.
Gladstone attorney Gregory Leyh and Independence attorney Ken McClain won the case for client David Burton, 67.
"People should stop smoking - that's what the message is," said Burton, a railroad retiree who once had a three-pack-a-day habit.
The punitive award is the first ordered by a federal judge against a tobacco company, several sources said.
"In the age of Enron, the real issue is accountability and Judge (John) Lungstrum's order speaks to that," Leyh said.
Reynolds' failure to disclose smoking's health risks decades ago helped lead to the award, Leyh said.
Since the 1953 Frank Statement, over 15 million Americans have died prematurely because they smoked cigarettes. The majority of these premature deaths could have been avoided absent the misconduct of RJ Reynolds and the other cigarette manufacturers. Since RJR was the largest cigarette manufacturer during much of the period of misconduct, it bears a disproportionate share of the responsibility when compared to its current share of the cigarette market . . . It is worth considering how much better off the world at large, and Mr. Burton in particular, would have been had RJR acted responsibly and provided to its customers the caution about smoking's role in peripheral vascular disease . . .
During trial, Plaintiff produced over 100 documents and 16 witnesses illustrating Reynolds' knowledge that its cigarettes cause serious disease, addiction and premature death. Plaintiff also produced significant evidence of Reynolds' intentional concealment of that knowledge from the American public and government. As a direct result of Reynolds' misconduct, its profits increased to mammoth proportions more than $34 billion in toto since 1953 importantly, the same year Reynolds' scientists concluded that smoking causes serious harm to smokers and the year RJR and the tobacco industry initiated its fraudulent scheme. Based on Dr. Burns' estimate of the loss of American lives due to smoking, a punitive award of $100 million represents the payment of less than $7 for each of the approximately 15 million American lives lost since 1953. Reynolds' grievous misconduct resulted in enormous profits and, therefore, requires the assessment of substantial punitive damages. A punitive damage award of only $5 million - a single day of Reynolds' cigarette profits - would not adequately punish Reynolds for the human misery inflicted on society by its misconduct or deter it from future misconduct and further conduct causing loss of life.
Can we have an open debate about smoking? Over the years, you’ve heard so many negative reports about smoking and health — and so little to challenge these reports — that you may assume the case against smoking is closed. But this is far from the truth. Studies which conclude that smoking causes disease have regularly ignored significant evidence to the contrary.1986 RJR ad. Some of the Burton evidence and transcripts are presented in the plaintiff's argument here.
Judge John W. Lungstrum of the U.S. District Court in Kansas City wrote in his decision that "Reynolds' conduct was highly blameworthy and deserving of significant punishment." He added, "The evidence does not reflect that Reynolds has repented of its ways."
Judge Lungstrum's ruling, handed down Friday in the case of a man made ill by smoking , capped several weeks of legal setbacks for cigarette makers. The string of verdicts and rulings in different states has renewed questions about the magnitude of the threat that lawsuits filed by individual smokers pose for tobacco companies.
"The scale of damages that juries are awarding is increasing, and judges are going along," said Martin Feldman, a tobacco analyst at Merrill Lynch in New York. "Individual claims may prove a much greater challenge to the industry than many have said." . .
his is the first award of punitive damages against a tobacco company by a federal court, where strict rules of evidence tend to favor defendants more than in state courts.
Reynolds blasted the punitive award as "excessive and unwarranted" and said it will appeal. "We will continue to aggressively defend these cases," said Charles A. Blixt, Reynolds's executive vice president and general counsel. "I'm confident that we'll prevail once we appeal."
As for whether the tide is turning against cigarette makers, Mr. Blixt said, "I don't think this is an adverse trend. It's inherent in the vagaries of the jury system. If you're trying enough cases, you're going to lose some." He added, "Nobody thought there was a big trend when we won six in a row." . .
Mr. Blixt said the U.S. Supreme Court has agreed to hear a case in which large punitive damages were awarded against an insurance company, and that the court's ruling in that case may help clarify the constitutional limits on punitive damages. . .
Judge Lungstrum went to great lengths in his opinion to explain why a higher multiple is justified in the Reynolds case. He noted that Reynolds's conduct resulted in very serious and foreseeable harm to the plaintiff. And he said that Reynolds "did not deceive him about facts which might affect the value of a luxury automobile," as was the case in BMW v. Gore, but instead deceived him about risks to his health.
Among Judge Lungstrum's findings were the following:
"[I]t is not for making a dangerous product that defendant [RJR] should be punished. It is for concealing how dangerous the product is that R.J. Reynolds merits punishment."
"Here, the insidious nature of Reynolds' fraudulent concealment lies not only in the evidence of its bare failure to disclose vital information but also in the evidence of its campaign to obscure the public's ability to appreciate the risks of smoking by attacking the credibility of the public health community's concerns while at the same time withholding and ignoring evidence which was within its control that would have made the truth available to consumers." . .
"Judge Lungstrum saw through Reynolds' smokescreen and recognized its behavior for what it is: egregious and outrageous wrongdoing that had a devastating impact on David Burton, as well as other residents of Kansas," said Edward L. Sweda, Jr., Senior Attorney for the Tobacco Products Liability Project, which is based at Northeastern University School of Law in Boston. Mr. Sweda, who attended the punitive damage hearing in Kansas City last month, noted that Judge Lungstrum specifically stated that his ruling was limited to Reynolds' conduct within the State of Kansas and that, according to the opinion, the court "did not consider the interests of other states in punishing and deterring such conduct. Had the court done so, it would have had a compelling basis to award punitive damages far in excess of $15 million."
"Today's historic ruling underscores the reality that, regarding tobacco litigation, the major tobacco companies are not facing a 'West Coast' problem; they face a reprehensibility problem.
Rather than being a matter of geography, the tobacco companies' litigation problems derive from their own sordid history of corporate wrongdoing, a history accurately and powerfully described by Judge Lungstrum in today's ruling," Sweda said.
Citing R.J. Reynolds Tobacco Co.'s "extremely reprehensible" conduct, a judge on Friday ordered the tobacco giant to pay $15 million to a Kansas City, Kan., man who smoked Camel cigarettes for 43 years.
U.S. District Judge John Lungstrum's punitive damage award was thought to be the first in the country ordered by a judge in a smoker-liability case. . .
Daniel W. Donahue, Reynolds' senior vice president and deputy general counsel, said company officials didn't think punitive damages were warranted.
"As we showed during the trial, Reynolds Tobacco had no information about smoking and health that wasn't publicly known during the entire time that the plaintiff...smoked," Donahue said.
Brown & Williamson Tobacco Corp. was a defendant in the lawsuit earlier and had been assessed a $1,984 share of the $198,400 February jury verdict. Brown & Williamson was dropped from the case, however, after reaching an agreement with Burton. . .
Kenneth McClain, an Independence lawyer who represents Burton, characterized the case as a landmark legal proceeding "in which R.J. Reynolds' pattern of deceit and deception was exposed to the whole world." . .
"I think this decision, along with the ongoing trend we're seeing -- with juries and now a judge getting outraged at these companies -- will have a cumulative effect," Sweda said. "It will force tobacco companies to change their behavior, or they will become more and more marginalized in society, with some very severe financial punishments imposed against them, along with increasing societal scorn and contempt."
Sweda said the punitive-damages award was the first that had been initially assessed in this type of tobacco case by a judge rather than a jury; the first to be levied in a federal court; and the first to be levied in a case in the Midwest.
As a precedent-setting case, he predicted, it would be cited by other plaintiffs around the country who have cases against Reynolds.
A federal judge is considering a request that R. J. Reynolds Tobacco Co. pay punitive damages to a smoker who lost his legs to a circulatory disease.
In February a jury ordered the tobacco company to pay actual damages of $196,416 to David Burton, 67. Burton, of Kansas City, Kan., claims he developed peripheral vascular disease after 43 years of smoking Camel cigarettes. Both his legs were amputated in 1993.
At a hearing Thursday, Burton's lawyer, Kenneth McClain, asked U.S. District Judge John Lungstrum to punish Reynolds for concealing from the public the harmful effects of smoking and the addictive nature of nicotine. He described the company's conduct as "reprehensible."
Lungstrum said he would have a ruling in 30 to 60 days.
Punitive damages in Kansas are limited to $5 million unless the "profitability from the defendant's misconduct" exceeds that amount. In that case a court can award 1 1/2 times the profits generated by the defendant's misconduct.
McClain didn't ask for a specific amount in closing arguments. But in a brief filed with the court he appeared to suggest that $100 million would not be inappropriate.
Kansas City, Kansas, Feb. 27 (Bloomberg) -- R.J. Reynolds Tobacco Holdings Inc. will face a May 16 hearing to determine how much the cigarette maker should pay in punitive damages to a longtime smoker.
A jury last week told the No. 2 tobacco company to pay $196,416 to David Burton, who blamed cigarettes for the vascular disease that led to the amputation of his legs.
The jury also concluded that R.J. Reynolds should pay punitive damages; the amount will be set by U.S. District Judge John Lungstrum. In a conference today, the judge didn't say if he would announce his ruling at the May 16 hearing.
Jurors also said that Brown & Williamson Tobacco Corp. should pay $1,984 in damages, but not punitive damages.
R.J. Reynolds may challenge the verdict even before the May 16 hearing. Brown & Williamson, a unit of British American Tobacco Plc, said it would appeal the verdict.
Burton, 66, a former railroad worker and janitor, claimed the tobacco companies failed to warn smokers about the risks of cigarettes.
Shares of R.J. Reynolds fell $1.58 to $65.07 today, while British American Tobacco's American depositary receipts fell 5 cents to $18.65. R.J. Reynolds is the No. 2 cigarette maker behind Philip Morris Cos.