The nation should thank the Florida jury which handed down the record-shattering $145 billion punitive damage award in a class-action suit against the tobacco industry. They made the system work, and delivered a civics lesson to us all.
Lesson No. 1: Lives should matter more than profits.
“For them — Big Tobacco — this trial was about money,” said jury foreman Leighton Finegan, an assistant principal at a Miami-Dade elementary school. “For us, it was about people’s lives.”
Finegan denounced Philip Morris attorney Dan Webb for saying a large punitives award would be “a death warrant” for the industry. “He ignored the death warrant on the millions of lives of people [the tobacco industry] lied about,” Finegan said.
Lesson No. 2: Corporations that engage in fraud and deceit, with deadly consequences, should be held accountable.
“We want this message loud and clear: We will not tolerate fraud and misrepresentation,” Finegan said. “They belittled or denied causation of the health effects of smoking and addiction, and had the gall to challenge public health authorities.”
Lesson No. 3: Punitive damages are a form of punishment — they have to be sufficiently large to make defendants take notice.
“We had a sense of mission,” Finegan said to journalists. “And we did not want to ignore the tremendous devastation that the product has caused. The number had to match that. It had to be significant.”
Lesson No. 4: The importance of punitive damages is their very uncertainty — they make it harder for corporations to calculate their liability and engage in “rational” decisions to harm the public.
The jury thought the size of the verdict “would put the companies on notice — not just the tobacco companies, all companies — concerning fraud or misrepresentation of the American public,” Finegan said.
These basic lessons have been obscured by a nimble public relations effort by Big Tobacco, and its proxies, to spin media coverage and public interpretation of the verdict.
The jury’s award would throw the industry into bankruptcy, the tobacco lawyers tell the media. But a tobacco firm memorandum that we obtained candidly acknowledges that the verdict will not bankrupt the industry, and that Florida law requires the judge to lower the award if necessary to avoid such an outcome.
The leading independent expert on tobacco pricing, MIT’s Jeffrey Harris, points out that with substantial increases in price, Big Tobacco can increase its revenues by tens of billions of dollars a year. The industry is reluctant to raise cigarette prices to revenue-maximizing levels because it knows this will deter future smokers and diminish the overall number of smokers — and thereby the industry’s political influence.
The decision is certain to be overturned, say the tobacco industry analysts on Wall Street, who have managed to convince investors not to abandon tobacco stocks. Anything is possible on appeal, of course, but the Florida Supreme Court has already declined to hear a challenge to the industry’s central bone of contention (that Florida smokers should not be joined in a class, and instead should bring their cases on an individual basis). And why is it that the media turns to tobacco industry analysts — who are heavily invested in tobacco stocks and have recently evolved into industry spokespeople — for litigation predictions?
Most dangerous is the line, subtly supported by the tobacco industry, that public policy should be made in Congress, not in the courts.
Public policy is, and should be, made both in the legislative and judicial branches. In the case of tobacco, the nicotine-money-addicted Congress has failed for decades to do its job. We should celebrate that the Engle jury has done its job. Higher prices from the large award will cut smoking rates dramatically, and over the years save hundreds of thousands of lives. And the threat of future verdicts will prod the industry to engage in less severe misconduct.
That is not to say that regulation isn’t important. But just as litigation is no substitute for regulation, regulation is no substitute for litigation.
In the coming months, the industry and its allies will almost surely propose a new legislative deal to trade regulatory concessions for litigation protections and immunities.
The rejection of such an offer in 1997 and 1998 made possible the Engle verdict, and the offer should be dismissed again, this time out of hand. That is another of the civic lessons to be drawn from the Engle jury.
As the tobacco control movement looks ahead, blocking another tobacco industry immunity proposal and focusing on the international operations of Big Tobacco will be two of the primary challenges ahead.