The Attorneys General may have provided the tobacco companies with more than simply a partnership with the states when they signed the Master Settlement Agreement (MSA). Based on a Georgia Supreme Court decision released this week, they may have also provided the tobacco companies with immunity from litigation.
In the case (termed the Gault case), the Georgia Supreme Court ruled that Georgia's participation in the Master Settlement Agreement precluded state citizens from seeking punitive damages from the tobacco companies related to smoking.
The litigation involved a suit by the widower of a woman who died, allegedly from smoking Brown & Williamson cigarettes, against the manufacturer for compensatory and punitive damages. The question of whether the MSA precludes plaintiffs from seeking punitive damages for smoking-related injuries was brought forward to the Georgia Supreme Court, which answered in the affirmative. The suit is now being sent back to the district court for adjudication of the compensatory damage claims.
The basis of the Georgia Supreme Court decision was three-fold, as follows:
"Because punitive damages serve a public interest and are intended to protect the general public, as opposed to benefiting or rewarding particular private parties, we find the State, in seeking punitive damages in the suit against B&W, did so as parens patriae and in this capacity represented the interests of all Georgia citizens, including plaintiffs here. Accordingly, we conclude that the State and plaintiffs were privies in that action."
"We similarly find identity of the causes of action. In the prior action, the State sought compensatory damages to reimburse the treasury for funds spent by the State for tobacco attributable health care costs. In the subsequent proceeding, plaintiffs sought compensatory damages for Ms. Freeman's tobacco-related personal injuries. Insofar as the punitive damage claims are concerned, the matters put in issue in the State's action and in plaintiffs' proceeding are the same. In each case, punitive damages were sought in connection with tobacco industry product liability claims."
"Here, the State sought punitive damages in its action against B&W and the plain language of the agreement demonstrates that the parties in that action intended to compromise and settle the State's claim for punitive damages. To that end, the agreement specifically defined settled claims as 'liabilities of any nature including civil penalties and punitive damages' and expressly included any claims the State asserted... .
The Rest of the Story
The rest of the story is that the Attorneys General appear to have signed away more than just the public's health when they agreed to the Master Settlement Agreement in November 1998. It turns out that they may have also signed away the legal rights of American citizens to pursue justice by disallowing them from suing tobacco companies to recover punitive damages.
This decision is a critical one, because it offers a very different view of the impact of the MSA than the one which the Attorneys General offered when they boasted about the Agreement after it was negotiated. It had been argued that the MSA only provided cigarette companies with immunity from lawsuits brought on behalf of the states. However, this decision makes it clear that the MSA is being interpreted in such a way that at least in Georgia, it also effectively precludes lawsuits against the companies brought by individual citizens or classes of citizens.
While citizens can still sue to recover compensatory damages, there will be little incentive for them to do so and even less incentive for attorneys to agree to take these cases if there is no possibility of obtaining punitive damages. So effectively, this decision does provide the tobacco companies with immunity in Georgia.
While this decision is binding only in Georgia, it certainly is going to lead the companies to pursue similar judgments in other states. And the decision does set a precedent (not a binding one) that could well be followed by courts in other states.
It also opens the door to the possibility of a definitive determination of this issue by the United States Supreme Court, which might just be interested in a question of this magnitude where there have been differing opinions offered by courts in the different states. Such a decision, if in the tobacco companies' favor, could decimate the entire future of tobacco litigation and perhaps even overturn a number of punitive damage awards that have already been made.
The Florida Supreme Court is prepared to release a decision any day now on an almost identical issue in the appeal of the Engle case, which had resulted in a jury verdict of $145 billion against the cigarette companies. Tobacco company defendants have argued that the state of Florida's settlement of its lawsuit against Big Tobacco precludes punitive damage claims in that case.
This story seems to confirm my prediction in a commentary of October 24 of last year that the "MSA may have provided immunity" for the tobacco companies.
In that piece, I argued that: "While the MSA was billed by the Attorneys General who signed it as precluding only state-based lawsuits against the tobacco companies and not providing protection from private class actions or large punitive damage awards, this very well may be the case. The Florida District Court of Appeals ruled that the MSA does in fact preclude punitive damage awards in private class action litigation where the major claims of the plaintiffs are similar to those of the states (e.g., fraud, conspiracy, and the sale of a defective and addictive product). ...
While it is not yet clear whether the Florida Supreme Court will agree with the appellate court's reasoning and it is not clear whether courts in other states would make similar findings, as of right now there is strong reason to believe that the MSA has indeed given the tobacco companies a large measure of immunity from private class action claims that are similar to those made by the states (which are, of course, similar to those being made in the majority of tobacco litigation throughout the country).
This provides more evidence to back up my earlier assertion that the Master Settlement Agreement was the worst public health blunder of my lifetime.
Now, not only have the state Attorneys General who signed the MSA released all state claims against the companies, but they have apparently also released, for all intents and purposes, many (perhaps most) private claims against the companies as well.
My first inclination is to close this post by chastising the AG signatories to the MSA for this public health blunder. Instead, I will close by congratulating the tobacco company attorneys who negotiated the MSA for their brilliance in taking advantage of the monetary and political greed of public officials who pretended to be primarily interested in the public's health. They knew that the billions of dollars would be too much to pass up, and they made them pay for every cent they received."
Just 5 days after the Attorneys General stood before the American people and boasted about the great accomplishments of the MSA and about how it was such a great public health victory, the truth has come out. The MSA was a complete public health and civil justice disaster. It has decimated tobacco litigation, and therefore a huge part of the tobacco control movement, in at least one state, and it threatens to devastate similar litigation (and thus, a key element of the tobacco control movement) in other states as well, and perhaps even in the nation as a whole.
Truly, the MSA was the worst possible thing that the Attorneys General could have done to advance the cause of tobacco control, public health, and social justice in the United States. The only thing worse is that this was all done because of the prospect of money and political gain.
What really happened is that the Attorneys General sold out the rights of American citizens to pursue justice and traded away the legal rights of American citizens without their consent, all in an effort to bring in lots of money to their states and political goodwill for themselves.
I can't think of a darker day in the history of tobacco control and public health than November 20, 1998.