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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.
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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 .
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.
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.
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.
"We're very pleased with the outcome," said Ken McClain, one of Burton's attorneys. "It's a case that easily might have gone against Mr. Burton had we not had a courageous jury willing to stare down the tobacco companies and say that their conduct was reprehensible and should be punished."
The federal jury of four smokers and four nonsmokers deliberated for a day and a half before finding R.J. Reynolds, maker of Camels, 99 percent at fault and American Tobacco, maker of Lucky Strikes, 1 percent at fault. American Tobacco, which is now Brown & Williamson Tobacco Corp., wasn't found liable for punitive damages. . .
The case, which Burton filed in May 1994 in federal court in Kansas City, Kan., also was noteworthy as one of the first in which tobacco company documents were ordered unsealed. Lungstrum rejected the defendants' arguments that the internal documents were protected by attorney-client privilege or the work product doctrine and ordered them to be produced.
"He basically found that the companies were claiming privilege for ordinary business matters, simply because they passed them through the hands of lawyers," McClain said.
The documents touched on the companies' knowledge of the harmful effects of smoking and the addictive nature of nicotine years before they publicly acknowledged either. . .
Reynolds maintained that smoking had not been established as a risk factor for peripheral vascular disease until the early to mid 1970s. The jury had been asked to consider whether there was a failure to warn only prior to July 1, 1969.
A federal jury has awarded a sick smoker nearly $200,000 in compensation against two U.S. cigarette makers, a lawyer for Brown & Williamson Tobacco Corp. said on Friday.
The jury in U.S. District Court in Kansas City split the award 99-1, after the court heard that the smoker, David Burton, smoked mostly cigarettes made by R.J. Reynolds Tobacco Co. (NYSE:RJR), whose brands include Camel, Winston, Salem and Doral.
Burton's product liability lawsuit claimed that his use of cigarettes manufactured by Brown & Williamson and R.J. Reynolds caused him to develop peripheral vascular disease. He claimed that he started smoking R.J. Reynolds' brands and only smoked Brown & Williamson's brands on occasion.
Of the total $198,400 in compensatory damages awarded in the suit against the two tobacco firms, Brown & Williamson, which makes KOOL, Pall Mall and Lucky Strike, was assessed only one percent, or $1,984 in compensatory damages and no punitive damages.
However, Brown & Williamson's lawyer Jeff Raborn said the company would appeal the verdict. There was no immediate comment from R.J. Reynolds.