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After 18 months of pre-trial work, three Memphis attorneys - Leo Bearman, Albert C. Harvey and Lee Chase - spent the past 17 weeks in the courtroom as the local lawyers working on what is considered certainly one of the longest legal cases in recent memory in Shelby County.
The attorneys successfully represented the three tobacco firms in which three separate cases were consolidated before a single jury. The jury reached a verdict on Monday (May 10) that the tobacco companies were not responsible for the deaths of three long-time smokers.
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Monday's outcome signals the industry's exposure to smoking-related suits has not risen as much as Wall Street had begun to fear, analysts said Tuesday.
But analysts warned tobacco companies will have to win a case or two on the West Coast to restore investor faith after Oregon and California juries hit Philip Morris with damages totaling $131.5 million in two separate cases.
Shares in British American Tobacco Plc rose four percent on Tuesday after a favourable ruling for the tobacco industry in a U.S. lawsuit.
The stock traded 20 pence higher at 550p -- having touched 554p -- by 0810 GMT.
"It's going to give investors confidence that the industry can still win . . . when these trials are in jurisdictions that they perceive as fair," said Gary Black of Sanford C. Bernstein & Co.
On Monday, Philip Morris' shares rose $1 to close at $38, while shares in R.J. Reynolds' parent, RJR Nabisco, fell $1.31 to $89.44. Both trade on the New York Stock Exchange.
Others found less comfort in such reasoning.
"There's no shortage of plaintiffs, or plaintiffs' lawyers, in either California or Oregon," said Martin Feldman, a tobacco analyst with Salomon Smith Barney. "California simply on its own remains a major threat to the industry."
There's no shortage of plaintiffs, or plaintiffs' lawyers, in either California or Oregon. . . California simply on its own remains a major threat to the industry. Martin Feldman, a tobacco analyst with Salomon Smith Barney. Quoted in <i>Victories in 2 States Give Cigarette Makers a Boost</i>
But analyst David Adelman of Morgan Stanley Dean Witter said the outcome "doesn't mean the two West Coast verdicts were aberrations." Indeed, the Memphis jury found Reynolds and Brown & Williamson liable for the death of one of the smokers, but didn't award damages because Tennessee law bars damages in cases where plaintiffs are found to be at least 50% responsible for their injuries. . . Shelby County Circuit Judge D'Army Bailey allowed the jury to view only a handful of internal documents accumulated by Jacksonville, Fla., plaintiffs lawyer Norwood S. "Woody" Wilner. Mr. Wilner's star witness for smoking-related pulmonary diseases, Allan Feingold of Miami, was prevented from testifying about industry conduct. As a result, Dr. Feingold, chief of the department of pulmonary medicine at South Miami Hospital, didn't testify at all.
Jury instructions in the case made it clear that plaintiffs could win damages only if the tobacco companies were more than 50% to blame for the lung cancer in each case.
``It's very good news for the industry in that, had it lost, it would've painted a particularly difficult outlook for tobacco litigation going forward. The win suggests that the West Coast losses were the result of two factors: the liberal bias of the West Coast, and the judges, who were far looser with the amount of plaintiff-oriented evidence allowed into trial.'' ``The industry is clearly well-served in those states where it needs to be found more than 50 percent to blame.''
``It's disappointing, but recognize that the plaintiffs were up against a much tougher standard of fault than in California and Oregon. It is important to emphasize that the jurors did find some fault with the tobacco companies in their behavior.'' ``This verdict shouldn't be a compelling factor at all in the industry's upcoming case in Mississippi, which deals with second-hand smoke. The industry won't be able to use its traditional blame-the-smoker defense it uses in direct smoking cases.''
Today, a jury in Memphis handed tobacco companies victories in three smoking and health cases that had been consolidated into one trial. A single jury heard the evidence and issued separate verdicts...all in favor of the tobacco companies. Watch streaming video which looks at the verdicts at http://www.newstream.com/99-193.shtml [This graph only]
Curtis Johnson Jr., a lawyer for the plaintiffs, expressed disappointment but vowed to continue taking the tobacco companies to court.
``This is one case, this is one verdict and we'll be back again,'' he said.
``Today's jury verdicts in three separate suits represent a significant victory and confirm that juries are still able to apply common sense and reasonable judgment regarding tobacco lawsuits,'' said Gordon Smith, attorney for Brown & Williamson.
``The jury in Memphis saw that these were not cases about documents or an alleged conspiracy, but cases about individuals who chose to smoke for many years and who were well aware of the risks associated with that behavior,'' Smith said.
``We are pleased with the jury's decision,'' said James R. Johnson, the lead defense attorney in the case filed by Bobby Newcomb, a smoker who died in 1998. ``The jury's verdict reflects the fact that they objectively judged the evidence, properly applied the rules of law and relied upon their common sense.
``Once again,'' Johnson said, ``jurors have agreed that smokers are well aware of the risks associated with smoking and have reaffirmed that they generally will not award money to smokers who assume those risks.''
They acknowledged that Newcomb died of lung cancer but argued that he was also a heavy drinker and gambler, and was comfortable with taking risks, cigarette smoking included.
In the latter case, the jury held that Newcomb was 50 percent responsible for his illness and that Reynolds bore 30 percent of the blame while Brown & Williams bore the other 20 percent.
In the other two cases, the jury assigned none of the blame to the cigarette makers.
``These verdicts, plainly and simply, reaffirm the common sense approach of jurors to these smoking and health cases,'' said Charles R. Wall, deputy general counsel for Philip Morris. ``Jurors reject the idea of giving money to people who chose to smoke.''
After less than 18 hours of deliberations, the 12-person jury returned its verdicts that Philip Morris was not responsible for the injuries suffered by the plaintiffs.
``Today's verdicts were especially gratifying to Philip Morris because we presented the testimony of company employees explaining to the jury how hard and long the company has worked to develop cigarettes responsive to health concerns,'' Wall said.
``In addition, we explained to the jury how Philip Morris, and indeed the entire cigarette industry, responded to the health claims made about cigarette smoking from the 1950s, through research and new products, in an effort to reduce risks associated with smoking,'' Wall said. ``I have to believe this testimony is reflected in the verdicts.''
The company witnesses testified that Philip Morris had marketed, albeit unsuccessfully, a cigarette with virtually no nicotine and is currently test marketing a cigarette that heats, rather than burns, tobacco. The company continues to do research on these and similar products.
What these verdicts show is that jurors continue to use their common sense and are wary of claims that smokers were unaware of health risks or that the company's actions influenced personal decisions on whether to smoke.Charles R. Wall, deputy general counsel for Philip Morris, on the Karney, et.al. verdicts. Quoted in <i>Memphis Jury Verdicts in Favor of Philip Morris U.S.A. Applauded</i>
``If you sue the entire industry like (Woody Wilner) did and you have multiple plaintiffs, the documents are not enough to carry one plaintiff. The defenses to each individual case have a cumulative value so that if you have three plaintiffs, bad things about one plaintiff's case are held against another plaintiff in the liability determination, which it appears is what occurred here. Remember, in our case the jury decided 50-50 on negligence. It was on the fraud charge that the jury sided completely in our favor.''
The jury agreed that cigarettes contributed in some way to Newcomb's death, though the companies' liability did not outweigh other factors, said foreman Rodney Marchand. The jury also determined that causes other than cigarettes contributed to the cancers that killed Karney and Bruch. ``It's more likely they died of kidney cancer and breast cancer,'' Marchand said of Karney and Bruch, respectively. ``Because they did not die of lung cancer, it could not have been caused by smoking.''
Tougher Case?
The fact that the Tennessee case combined three families' claims made it harder for them to win, said Raymond Thomas, one of the attorneys who won the $81 million Portland verdict. ``Bad things about one plaintiff's case are held against another plaintiff in the liability determination, which it appears is what occurred here,'' Thomas said.