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Brooklyn Law School Legal Studies Research Papers Accepted Paper Series Research Paper No. 192 June 2010

Reaching Equilibrium in Tobacco Litigation
Aaron D. Twerksi James A. Henderson, Jr.

This paper can be downloaded without charge from the Social Science Research Network Electronic Paper Collection: http://ssrn.com/abstract=1618959

REACHING EQUILIBRIUM IN TOBACCO LITIGATION
James A. Henderson, Jr.* Aaron D. Twerski** Recent pro-plaintiff developments in tobacco litigation may lead to the conclusion that such litigation will go on endlessly and threaten the financial viability of the tobacco industry. This article takes the opposite position. Although the industry may take some near-term losses, it is far more likely that tobacco companies will survive short-term losses and that tobacco litigation will reach a stable equilibrium within the next fifteen to twenty years. The threat of third-party payer claims is no longer viable. Courts have unanimously rejected them. With the exception of cases pending in Florida and West Virginia, there are few individual personal injury claims pending throughout the United States. Both the Florida and West Virginia trial plans are subject to serious constitutional challenge. Two possible serious threats to the tobacco industry remain– punitive damage awards and cases for economic loss based on fraudulent marketing of light cigarettes. The former are likely to come under serious constitutional scrutiny and the latter cases are viable only as class actions. Under the Class Action Fairness Act (CAFA), new cases will end up in federal courts which have been hostile to class certification in cigarette litigation. The relatively few pre-CAFA class actions that have been certified in state courts will have to grapple with difficult issues in attempting to assess damages. I. Introduction Several recent developments in U.S. tobacco litigation–large individual jury verdicts against tobacco companies from a pool of over 8,000 individual plaintiffs in Florida;1 potentially significant economic-loss class actions based on the allegedly fraudulent sale of light cigarettes

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Frank B. Ingersoll Professor of Law, Cornell University. A.B., 1959, Princeton University; LL.B., 1962, LL.M., 1964, Harvard University. ** Irwin and Jill Cohen Professor of Law, Brooklyn Law School. A.B., 1962, Beth Medrach Elyon Research Institute; B.S., 1970, University of Wisconsin-Milwaukee; J.D., 1965 Marquette University. The authors gratefully acknowledge the support of the Brooklyn Law School Research Fund and that of the Chadbourne & Parke law firm (who represent various tobacco companies) in facilitating this project. We also acknowledge the research assistance of Ruth DeLuca. The opinions expressed are exclusively those of the listed authors. 1 Brown v. R. J. Reynolds Tobacco Co., Brief of Appellees, p. 11 (Appeal from the United States Dist. Court from Middle District of Florida Case, No. 07-0761-CV-J-25 HTS.

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pending in a number of jurisdictions2–might lead observers to believe that tort claims based on tobacco use are a growth area with an increasingly promising future for injured claimants. This article argues that quite the opposite is true. To be sure, when the first tort claims against tobacco companies were brought to court a half century or so ago,3 a reasonably prescient observer might have anticipated that tobacco plaintiffs would enjoy increasing success over time. Surely high risk deadly products4 would support a steady stream and then a flood of significant recoveries in an American system of strict products liability undergoing rapid, pro-plaintiff expansion.5 For all one might have foreseen 50 years ago, the tobacco companies’ days were numbered. And yet, with only a relatively few exceptions, this has not occurred. Plaintiffs historically faced a lack of success as courts rejected their theories of recovery as a matter of law.6 This article briefly summarizes the history of...
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