The seven-to-two decision in Cipollone v. Ligget Group Inc., Philip Morris Co. Inc. and Lorillard Inc. "is an almost complete victory," says Richard Daynard of the Tobacco Products Liability Project. "It's certainly a victory on anything that really matters to us in the case."
No lawsuit has so far succeeded in forcing a tobacco company to pay damages to smokers who claim they were harmed by the product.
The decision bars litigation charging tobacco companies with failing to provide adequate warnings, and plaintiffs cannot argue that the use of healthy people in cigarette ads counteracts the federally mandated warning language.
Tobacco companies called the decision a victory because plaintiffs will have to prove that industry misled the public about the dangers of tobacco. A Philip Morris statement said, "While the Court failed to hold that claims based on breach of express warranties or intentional misrepresentation are preempted, this should have little practical effect on the litigation." Tobacco companies insist that there has never been any fraud on the part of the industry.
But Daynard says that there has only been one case that has gone to a jury dealing with fraud by the tobacco industry about the dangers of cigarettes. Recent information about public deception on the part of the tobacco companies was not available in that case, Daynard says. "The defendants' spin has historically been, �no jury is going to be moved by the cries of a smoker who continued to smoke after the warnings came on.' But that's because juries haven't seen what the tobacco companies have been doing. Now they're going to be confronted with the tobacco industry's behavior."
The lawsuit, brought by GE shareholder Thomas Hughes against the GE Board of Directors and GE, is based on allegations made in another recent lawsuit by Edward Russell, a former GE employee, which charges that GE conspired with a South African company to fix prices in the industrial diamond market.
The diamond market is a $600 million a year industry. GE and DeBeers Consolidated Mines control approximately 90 percent of the world market for industrial diamonds. The Justice Department is conducting a criminal investigation into GE's relations with DeBeers.
GE spokesperson George Jamison denies the allegations and dismisses Russell as nothing more than a disgruntled employee. DeBeers also denies the charges.
The shareholder complaint charges that on several occasions GE intentionally refrained from taking advantage of opportunities to make inroads into DeBeers's market and potentially increase profits by $50 to $100 million per year in order to keep from undermining the price-fixing agreement.
Mark Rifkin, an attorney in the suit against GE, says that company shareholders should not be forced to absorb the cost of any fines assessed. "If the company is penalized or fined, we would expect that the individual defendants would be responsible for those damages," he says, not GE stockholders.
But Charles Siegel, the lawyer who moved the cases through the Texas court system, has left the Dallas plaintiffs' firm of Baron & Budd, the firm he worked at for six years, after a dispute with the firm over what he claims were the conditions of settlement.
According to Siegel, the defendant companies sought, as a condition of settlement, that the case be converted into a class action "to foreclose any future liability and to wrap that kind of litigation up once and for all."
Baron & Budd would not agree to that condition, according to Siegel.
However, Baron & Budd did agree not to bring any future similar cases, Siegel charges. "That is fine for Baron & Budd," he says. "It was a firm decision not to continue that kind of litigation anyway. But it was not an agreement that I wanted to be part of."
Fred Baron, lead partner in the Baron & Budd firm, says that Siegel left the firm because he was denied a partnership. "It is absolutely not true that he left the firm because there was a condition in the settlement that Baron & Budd not take any more of these cases."
Siegel has left the firm to set up his own practice representing workers injured by the pesticide, dibromochloropropane (DBCP).
- Ben Lilliston