The jury in Piendle v. R.J. Reynolds returned a punitive damages verdict of $180K against R.J. Reynolds, and $90K against Philip Morris. The compensatory damages award in Phase 1 was $4M. The total punitive damages award, $270K, was approximately two orders of magnitude lower than the amount the plaintiff had suggested, and lower, even, than the $900K that the defense had suggested, if the jury believed that punitive damages were warranted.
Piendle v. RJ Reynolds
“Today we’re here to decide how much — how much — these defendants should be punished,” Searcy Denney’s Greg Barnhart told the jury in closing the punitive damages phase of Piendle v. R.J. Reynolds.
“Was it a well-executed strategy? You know under the evidence that it was. And how do we know that? Because they said it was. It was their strategy, and that was a strategy that was designed for years. Not just for a day. Not for a week, not for a month. For years. And did they do it well? Oh, did they do it well. They doggone did it well. They did it well for years and years and years and they congratulated themselves, on how beautifully it was designed and executed. So — the degree of misconduct: was it willful? You bet it was. There’s no doubt about that…”
“You cannot, as a business strategy, try to hurt people. You cannot care less whether what you sell addicts people and kills them. You cannot do that.”
Mr. Barnhart suggested a number of different measures of damages. For example, suggested Mr. Barnhart, if Reynolds’ net worth was at least $6B, as its CFO had testified, then 1% would be $60M. Mr. Barnhart also considered net annual after-tax profit, noting that Reynolds had accumulated $64M of net after-tax profit during the 26 days of the trial, and the value of a year of life, noting that Mr. Piendle’s life had been shortened by 23 years. “What kind of award — what kind of punishment — will make them stop — will punish them and deter them from making bad acts again?”
For the defense, Jones Day’s Peter Biersteker told the jury that a punitive damage award to deter the tobacco companies from making an unsafe product was not appropriate, because there could be no safe cigarette. “They can’t be made safe,” said Mr. Biersteker, “but that doesn’t mean they are unreasonably dangerous and defective. All conventional cigarettes, as you know, are capable of causing lung cancer and have the potential to addict. Again, that doesn’t mean they are defective. Cigarettes are not defective and unreasonably dangerous just because they have inherent risks that you can’t do anything about. Rather, a defect is something that Reynolds is capable of fixing, and didn’t, while still having a product that is acceptable to consumers…”
“Mr. Barnhart was up here,” Mr. Biersteker reminded the jury, “and he said that R.J. Reynolds tobacco company, and I assume by extension Philip Morris, could have cared less about unreasonably dangerous and defective products. Well let’s talk about that…Reynolds was the first to publish the identities of between one-half and one-third of the known constituents of cigarette smoke. They rapidly reduced tar and nicotine yields as urged by the public health community throughout the entire time that Mr. Piendle smoked — in fact, throughout the entire time he was alive…”
“And Mr. Barnhart said, when he was up here, ‘Golly, would the world have been different if the tobacco companies had only cooperated with the government with respect to the nature and the design of their products?’ He seems to have forgotten that for ten years they did precisely that with the National Cancer Institute’s ‘Less Hazardous Cigarette Program.’ Did that result in a safe cigarette? No, because it can’t be done…[T]hey collectively financed basic medical and scientific research on the diseases associated with smoking through the American Medical Association and other institutions…and you heard the testimony that the recipients of that funding included Nobel prize winners, resulted in thousands of publications in peer-reviewed literature…”
“Reynolds believes that its potential is all about health and safety,” said Mr. Biersteker, and he described a number of current safer or smoke-free tobacco alternatives. “So as you have seen, the present R.J. Reynolds, for a long time now, is committed to producing cigarettes under its harm-reduction strategy, recognizing that they cannot succeed in making any cigarette safe…Mr. Barnhart, I think, said in his closing a few minutes ago, that this is your opportunity to put an end to misconduct. And I would suggest to you that the evidence…is not something that needs deterrence…”
Mr. Biersteker suggested that if the jury were considering a punitive damage award, the numbers suggested by Mr. Barnhart were unreasonable. “I think they are unreasonable given that cigarettes are legal, even though they are dangerous; given that cigarettes are dangerous by nature, not by design, and the efforts that these companies, and Reynolds in particular, has made to try to reduce the risks; given my client’s current conduct…given that any award of punitive damages in this case would be above and beyond the compensatory damages that you have already awarded and that you have decided will make Mrs. Piendle whole; given that this is but one of many cases pending against Reynolds, or cases that could be brought by other members of the Engle class concerning actions taken decades ago by people who are no longer with R.J. Reynolds; given that each and every one of the Engle class members has the same opportunity to seek compensatory and punitive damages in cases just like this one…I suggest that the evidence in this case does not warrant the imposition of punitive damages. But I realize you might disagree with me. It’s happened before. And if you do, let me suggest an amount…$900,000…”
In a fiercely contested closing rebuttal, Searcy Denney’s Jack Scarola challenged the jury to consider whether the health disclaimers on the R.J. Reynolds website constituted an attempt to educate the public or were only for show. “Is this a changed company? Or is it the same company, with the same priorities. Profit over safety. Deception over truth. Marketing means more than people’s lives.”
At the start of the punitive damages phase, the Piendle v. R.J. Reynolds jury heard from former tobacco CEO Robert Heimann by video from a deposition taken in December, 1986. Mr. Heimann testified as to American Tobacco Company’s conclusion that cigarettes were not injurious to health, and as to the research underlying this conclusion. Mr. Heimann testified that the surgeon general was “dead wrong” in concluding that cigarette smoking causes lung cancer, and that a long list of health organizations denouncing cigarette smoking as hazardous were all wrong, even though he could not name any organization that had concluded otherwise.
For the defense, R.J. Reynolds called to the witness stand Tom Adams, Reynolds’ Executive Vice President and Chief Financial Officer. Adams testified with respect his role at Reynolds, “Since 2008 I’ve had a seat at the table, and so virtually all big decisions, I have input on.” Mr. Adams testified that the authors of the disturbing memos shown during the first phase of the trial have no current role in running R.J. Reynolds today. According to Mr. Adams, today Reynolds’ “Guiding Principles and Beliefs” serve as a constant reminder for people to act the right way, including addressing the issues regardling the use of and harm associated with tobacco products in an open and objective manner
Quoting the guiding beliefs and principles, Mr. Adams told the jury that the best course of action for tobacco users concerned about their health is to quit, and that significant reductions in harm could be achieved by encouraging smokers to migrate to smoke-free tobacco and nicotine products. Mr. Adams specifically mentioned the low-smoke cigarette Eclipse, which he characterized as not-profitable, and smoke-free product Camel Snus.
On cross-examination, plaintiff attorney Greg Barnhart read aloud the warning on Camel Snus, “This product is NOT a safe alternative to cigarettes,” and challenged Mr. Adams, “some of your customers, whom you urge to switch to oral tobaccos, will get, as a result, mouth cancers…will get ill, as a result of using Camel Snus…..and so by encouraging people, for whatever reason, as the company does, to switch to a different form of tobacco product, the company is knowingly encouraging people to switch to a product that can make them ill.”
Mr. Adams replied, “If they are concerned about their health and they want to reduce the harm associated with tobacco products, they should quit — completely. And if they can’t quit smoking, then the next best thing is to use a non-combustible product.”
Mr. Barnhart suggested that if Reynolds were truly concerned about the health of its customers, it would encourage all of its customers stop using tobacco products, not merely the ones who were concerned about their health. Mr. Adams responded that, “There are our customers, and there’s all these other stakeholders that are involved, and we’re trying to provide alternatives for people who use tobacco products.”
Noting that tobacco replacement therapies had been on the market for decades, but that Reynolds was a long way off from introducing them in the United States, Mr. Barnhart asked, “If Reynolds were truly concerned about the health of its cigarettes, can you tell this jury why, until now, and only in a foreign country, it hasn’t been at the forefront of trying to develop nicotine replacement therapies to help people get off Snus, and cigarettes, and Camels, and every other product that the company makes? Why not?”
The jury in Piendle v. R.J. Reynolds found that Charlie Piendle’s addiction to cigarettes was the legal cause of his death, and awarded $4M in compensatory damages to his widow, Margaret Piendle. The jury apportioned 45% fault to Mr. Piendle, and 27.5% fault each to R.J. Reynolds and Philip Morris. The jury also found that punitive damages were warranted, and the trial will move to the punitive damages phase.
Hon. Judge Robin Rosenberg indicated to the jury that the punitive damages phase would likely last three days or less, and that the punitive damages phase might be scheduled to begin Monday, August 16.
In his closing argument, Jones Day’s Peter Biersteker reminded the jury in Piendle v. Reynolds, “It would be very easy for you to forget during Mr. Barnhart’s closing that this case is about Mr. Piendle…and the choices he made, and make no mistake about it: they were choices.”
According to Mr. Biersteker, Mr. Piendle was simply not addicted to cigarettes. He did not have withdrawal symptoms after he quit, such as sleeping trouble, anxiety, difficulty concentrating, weight gain, headaches or sore throat.
Moreover, said Mr. Biersteker, neither of the Piendles were committed to smoking. They never threw away their ash trays or their lighters; they never visited a smoking cessation clinic or tried hypnosis; they never obtained a prescription for a smoking cessation aid; and they never told their family or friends they were trying to quit.
“I submit to you,” Mr. Biersteker told the jury, “that the plaintiff has not carried its burden of showing class membership.”
Tobacco products are dangerous by nature, not by design, said Mr. Biersteker, and the tobacco companies’ design efforts were aimed at increasing the safety of cigarettes. ”Why would someone who makes a consumer product want to kill the consumer?” asked Mr. Biersteker. “That’s just nutty. The objective was to make them safer.”
Moreover, the plaintiff had failed to show that Mr. Piendle started to smoke or continued to smoke because of any cigarette ad. Instead, the witness testimony indicated that he did not pay attention to ads or blame his lung cancer on cigarette advertising. “Ask yourself this,” Mr. Biersteker challenged the jury: “If Mr. Piendle was a hapless victim of advertising, what was he doing smoking a women’s cigarette like Virginia Slims?”
“There was plenty of evidence that, apart from the not-prudent statements, the tobacco industry cooperated both with respect to the design of their cigarettes and by publishing research.” Even if information was concealed, that concealment was not the legal cause of his harm, because many pieces of evidence in the case showed that Mr. Piendle already knew that cigarettes were dangerous. If the tobacco companies had made additional disclosures, it would not have affected his behavior.
Searcy Denney’s Greg Barnhart began closing arguments in the Piendle v. R.J. Reynolds Engle-progeny tobacco trial.
“Remember in opening statement when I pulled out a cigarette? It was shocking, it was jarring,” said Mr. Barnhart. ”But to understand Charlie Piendle’s activities,” Mr. Barnhart advised, the jury would have to go back to the time in which Mr. Piendle lived.
Mr. Piendle’s decision to start smoking was made in the 1950′s, when 80% of all U.S. males smoked, Mr. Barnhart recounted. Charlie graduated in the high school class of 1959 — 65% to 68% were regular smokers.
Mr. Barnhart pointed out that one of Charlie Piendle’s friends had come to testify for his friend. “When you have a man who inspires that kind of love, even 14 years after his death, that’s a remarkable man and a tremendous loss.”
“It’s rare that you get a case where you get actual documents showing a conspiracy, a cover-up, a plan…Most cases you have to piece it together. Not here. You’re going to see it in their own words.”
Mr. Barnhart offered to play CVN video of expert witness testimony during closing argument, which has been permitted in many trials. The use of CVN video in closings is allowed in most courts, even the video is not itself evidence, because the closing arguments themselves are not evidence, and therefore the videos are offered as demonstrative evidence, no different from other attorney-created displays or computer animations, not as evidence in the case.
Testimony completed and both sides rested this morning in Piendle v. R.J. Reynolds.
The defense questioned plaintiff Margaret Piendle about relationships she had had after Charlie Piendle’s death and her prior deposition testimony.
Judge Rosenberg advised the jury that closing arguments would begin at 8:30 am Monday morning, which is earlier than their normal start time. There is a possibility that closings may be heard in a different, larger court room.
Piendle v. RJ Reynolds, the first Engle-progeny tobacco trial to be held in Palm Beach, Florida pits Searcy Denney’s Greg Barnhart, representing Charlie Piendle’s widow, Margaret Piendle, against Jones Day’s Peter Biersteker, on behalf of RJ Reynolds, and Shook Hardy Bacon’s Frank Kelly, on behalf of Philip Morris. CVN is webcasting live, gavel-to-gavel.
According to Mr. Barnhart, Charlie Piendle started smoking in 6th or 7th grade, in the early 1950′s. Piendle smoked two packs per day for 30 years. In 1995, at age 54, he was diagnosed with cancer, and he died in 1996.
Mr. Barnhart said that in the 1950′s some studies were publicized linking lung cancer to smoking, which resulted in a serious sales decline. In response, according to Mr. Barnhart, the tobacco executives from various companies held an emergency Christmas Eve meeting at the Plaza Hotel in 1953, and “linked arms” to hire the best public relations firm they could — Hill & Knowlton — to undermine the perceived health threat.
“It’s fortunate for us,” one of the executives at the 1953 meeting allegedly said, “that cigarettes are a habit they can’t break,” Barnhart recounted. The executives set as their goal, said Barnhart, to assuage smokers’ anxiety, and came up with the Frank Statement to Cigarette Smokers which was published in January 4, 1954, and “devised a plan that was carried out for the next 50 years.”
The plan, according to Barnhart, was to make it easy to start, make it as hard as possible to stop, and make it as easy as possible to start up again. ”What happens,” concluded Barnhart, “is that teenagers’ brains are not fully developed…if you start, as Charlie Piendle did, as a teenager or a very young teenager, you are more likely to become addicted because of the effect of nicotine on the young and immature brain.”
Philip Morris and RJ Reynolds,” said Barnhart, “kept [Charlie Piendle] smoking, they prolonged his smoking, they helped him become addicted, they kept him smoking at high levels, and they provided a psychological crutch so that Charlie, and all of the millions of Charlie’s around this country, would keep on smoking. They comported with what they planned to do in 1953, their brilliantly executed plan, you’ll find, when the evidence continues today, cigarette sales went up after 1953, they created doubt, and they made relapse so doggone easy.”
Representing RJ Reynolds, Peter Biersteker told the jury,“Nobody forced Mr. Piendle to smoke. Nobody tricked him…He called cigarettes ‘cancer sticks’…when…he started smoking…And everybody referred to cigarettes as ‘coffin nails…’
“Over the years, Mr. Piendle received thousands — thousands — of warnings, including the warnings that were on the packs, about the health risks of smoking, and despite knowing the health risks of smoking, Mr. Piendle, a former Marine, who was strong-willed, not weak, and pretty much did what he wanted to do, when he wanted to do it, enjoyed smoking, and he chose to smoke.”
“There will be no evidence that Mr. Piendle ever tried or wanted to quit in the 1950s and 1960s. You will hear about some New Year’s resolutions that Mr. and Mrs. Piendle made in the 1970s and in the 1980s. But the evidence will be that they weren’t that serious, and they weren’t even that memorable to Mrs. Piendle.
“The evidence will finally be, as you heard before, that in 1989 Mr. Piendle made a choice, and he just quit. He went cold turkey. And apart from being a little moody…he didn’t exhibit the other symptoms that people who are addicted experience when they quit. He just quit. He never picked up another cigarette, despite the fact that Mrs. Piendle was still smoking.”
Moreover, said Mr. Biersteker, “There will be no evidence that anything that RJ Reynolds or Philip Morris did or did not do — other than selling cigarettes, which is perfectly legal — caused him to start or kept him from quitting smoking…”
“In view of the evidence you will hear about Mr. Piendle’s disregard of the information he knew or that was readily available to him about the health risks of smoking, the evidence will be that Reynolds and Philip Morris should bear no, or at most a very small, portion of responsibility.”
Frank Kelly, on behalf of Philip Morris, explained a range of different definitions of what constitutes addiction. Mr. Kelly suggested that “Mr. Piendle was a very social guy, had a lot of friends. And many of those friends smoked. When he was with those friends, he smoked. When he was in situations where you couldn’t smoke — like in movies, restaurants, when he went on his long motorcycle rides — he didn’t need to smoke.”
“Mr. Piendle was never diagnosed as being addicted to nicotine and cigarettes. He never sought counseling to quit smoking at any time. He never complained to anybody that he was a nicotine-using addict. In fact, Mr. Piendle never complained to anybody about his inability to quit smoking. Because the evidence just isn’t there that he had an inability to quit smoking.”
Piendle v. RJ Reynolds, the first Engle-progeny tobacco trial to be tried in Palm Beach, Florida, before Hon. Robin Rosenberg, is scheduled to begin Wednesday. CVN will webcast the Piendle trial gavel-to-gavel.
Charles Piendle died of lung cancer at age 55, after 30 years of smoking. His widow Margaret will attempt to establish that Charles was addicted to smoking, and his addiction caused his death from lung cancer, and thus she is entitled to recover damages as a class member in the Engle litigation.
Piendle will be represented by Searcy Denney Scarola Barnhart & Shipley.