Schwartz, Gary T.

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Pepperdine Law ReviewVolume 27Issue 4 Beyond Tobacco Symposium: Tort Issues inLight of the Cigarette LitigationArticle 65-15-2000Cigarette Litigation's Offspring: Assessing TortIssues Related to Guns, Alcohol, & OtherControversial Products In Light of the TobaccoWarsGary T. SchwartzFollow this and additional works at: https://digitalcommons.pepperdine.edu/plrPart of the Litigation Commons, and the Torts CommonsThis Symposium is brought to you for free and open access by the School of Law at Pepperdine Digital Commons. It has been accepted for inclusion inPepperdine Law Review by an authorized editor of Pepperdine Digital Commons. For more information, please contactjosias.bartram@pepperdine.edu , anna.speth@pepperdine.edu.Recommended CitationGary T. Schwartz Cigarette Litigation's Offspring: Assessing Tort Issues Related to Guns, Alcohol, & Other Controversial Products In Light ofthe Tobacco Wars , 27 Pepp. L. Rev. Iss. 4 (2000)Available at: https://digitalcommons.pepperdine.edu/plr/vol27/iss4/6Cigarette Litigation's Offspring:Assessing Tort Issues Related toGuns, Alcohol, & OtherControversial Products In Lightof the Tobacco WarsGary T. Schwartz*INTRODUCTIONLet me begin by commenting on what I shall refer to as the structure of dangerwith respect to tobacco, guns, and alcohol. Tobacco-mainly in the form ofcigarettes-provides undeniably significant benefits for consumers. Cigarettes, I amtold, improve one's concentration. Cigarettes, I also learn, have a very good taste.In addition, cigarettes function simultaneously as an effective antidepressant andan effective tranquilizer. To that extent, a cigarette is a kind of miracle drug thatone cannot otherwise acquire in the medical marketplace. It is available, moreover,without going through the costly intervention of any physician.Neyertheless, cigarettes kill more than 400,000 Americans per year. Thosewho die are, in almost all instances, the immediate consumers of tobacco products.They suffer death even though they use those products in altogether normal andproper ways. To be sure, it can be argued plausibly that cigarette smokers make adeliberate choice in deciding to smoke in the first place. Accordingly, whatever isleft of the tort defense of assumption of risk is relevant to whatever tort claims theymight bring. Even so, it would be difficult for a court to conclude that cigarettesmokers behave unreasonably in smoking cigarettes, and therefore are guilty ofcontributory negligence. Actually, many of us are no doubt sanctimoniousnonsmokers, who might indeed be willing to say that smoking cigarettes isunreasonable. Obviously, however, tobacco companies defending against lawsuitsare not in a position to argue that buying and using their products consists of an*. William D. Warren Professor, UCLA School of Law. These introductory remarks wereoriginally prepared for purposes of oral presentation at Pepperdine's Symposium, Beyond Tobacco:Cigarette Litigation's Offspring: Assessing Tort Issues Related to Guns, Alcohol, and otherControversial Products in Light of the Tobacco Wars. Subsequently, the Law Review Editors haveasked to publish my remarks, and I have agreed to this. My footnoting is minimal.unreasonable act on the part of smokers themselves. Therefore, in litigation againstthose companies, the companies are in a position to invoke assumption of risk asa possible affirmative defense; yet it would be awkward for them to arguecontributory or comparative negligence as a separate defense.As far as guns are concerned, they provide very substantial benefits in termsof both self-defense and recreational activities such as hunting. Nevertheless, gunsare responsible for many deaths and injuries each year. An important point is thatguns rarely kill or injure the consumers who themselves buy the gun products.Rather, guns kill innocent third parties, who have in no way assumed the risk ofthe dangers associated with guns. Even so, in general, guns produce these resultsbecause of the careless or even willful misuse of the guns by those who havepurchased and own the guns. These misusers, then, are the principal tortfeasorswith respect to the injuries that guns produce. Nevertheless, these principaltortfeasors are frequently not apprehended or identified. And even if they areapprehended, they are frequently insolvent with respect to liability for the harmstheir tortious conduct has caused. As far as the use of guns is concerned, anobvious and pertinent point is that most gun owners use guns in normal andappropriate ways. It is a limited, though clearly significant, fraction of all gunowners who misuse guns either negligently or willfully in ways that impose seriousinjuries on innocent third parties.Turn now to alcohol. As properly used by most consumers, alcohol providesplenty of recreational and relaxing benefits. Not only that, but alcohol in moderateuse evidently improves the health of those who drink and consume it. A beer a dayhelps keep the doctor away. That is literally true. According to the recent medicalliterature, one or two drinks per day of beer or wine appear to be associated withsignificantly improved health outcomes. However, when alcohol is overutilized byconsumers, it can destroy the consumers' own health. Furthermore, if used byconsumers at improper times, alcohol can be highly productive of serious injuries.There are 20,000 auto fatalities per year that are associated with drinking on thepart of the driver of one of the cars involved in the accident. Moreover, eventhough most of the publicity has been focused on alcohol and drunk driving,alcohol is an enormous contributor to serious accidents in all kinds of other ways.Of all adult pedestrians who are killed in highway accidents, about 30 percent arelegally drunk at the time of the accidents themselves. Of all people killed by fallingdown stairs and by drowning in bodies of water, roughly half are intoxicated at thetime of the fatal accidents. Hence alcohol is a background factor in a quite largepercentage of all fatal accidents. In all these ways, alcohol used improperly (orused at improper times) is a disaster in terms of bringing about serious healthproblems and personal injuries.In sum, all three products-tobacco, guns, and alcohol-are quite dangerous.Nevertheless, the structure of danger differs significantly from product to product.Keep in mind, moreover, that modem products liability rules, as expansive as theyseemingly are, do not impose liability on dangerous products as such. Rather, theyimpose liability on products that contain what the law refers to as defects.[Vol. 27: 751, 2000] Cigarette Litigation's OffspringPEPPERDINE LAW REVIEWConsider automobiles. About 40,000 people die in auto crashes each year, andseveral million more suffer personal injuries. The overall economic cost of autoaccidents is well over a hundred billion dollars per year. But even thoughautomobiles are enormously dangerous, there is no general or "wholesale" rulemaking auto manufacturers automatically liable for all auto accidents that result.Rather, lawsuits are brought against auto makers on a limited "retail" basis foraccidents that seem caused by particular defects in cars. When I gathered data onall of this several years ago, my data indicated that automakers end up bearingliability for only a tiny fraction of all auto accidents-a fraction much less than onepercent.By now, we are quite familiar with the elements of the concept of defect withinproducts liability. Arguments for products liability might seem strong againstcigarette manufacturers: after all, their products produce injury even though theyare used by consumers in entirely normal ways. But despite this fact, it turns outto be very hard to figure out where the defect lies in tobacco or in cigarettes.Manufacturing defects simply are not much of an issue. A warning has beenprovided on cigarette packages under federal law since the mid- 1960's. Moreover,claims of failure to provide warnings in addition to those required by federal lawmay well be legally preempted by the federal statute itself. As far as design defectsare concerned, proof of a design defect depends in large part on the demonstrationof a better alternative design. In the context of cigarettes, it is very difficult toidentify an alternative design that would reduce the danger of cigarettes withoutsignificantly impairing the value they provide to cigarette smokers. The recent guncases, have raised allegations that guns could incorporate safety devices that mightbe effective in somewhat reducing the accident rate. Yet, the overall desirabilityof these safety devices seems quite controversial. Moreover, such safet5 deviceswould be effective in eliminating only a limited fraction of all gun-related injuries.Obviously, no safety device would prevent a bad person from using a handgun anddeliberately inflicting a gun wound in the course of committing a crime.What has been genuinely novel about the tobacco cases in recent years, andnow the gun cases as well, is that suits have been brought not by injured victimsthemselves but rather by public entities, state and local. What are these suits allabout? Of course, states incur health costs on account of Medicaid programs, andcities incur health care costs on account of public hospitals. In addition, withrespect to the gun cases, cities absorb law-enforcement costs in tracing down theconsequences of gun-related crimes.As far as health care is concerned, assume that the patients themselves--the1. See Gary T. Schwartz, The Beginning and the Possible End of the Rise of Modem AmericanTort Law, 26 GA. L. REV. 601,633 (1992).immediate victims-have tort claims against tobacco companies or gun companies.Assume further that they receive health care treatment from state and localprograms. It is possible, then, that these public entities can assert the claims of theprimary victims by way of subrogation. Subrogation either can exist under thecommon law, or specific state statutes and perhaps local ordinances can provide forit. However, the question with respect to subrogation-like claims is whether thoseclaims must proceed case-by-case, or whether the public entities can in some senseaggregate individual claims and assert them in a mass-tort-like way.Subrogation apart, public agencies obviously incur economic costs inproviding treatment to those who suffer disease on account of tobacco, or injuriesand disease on account of guns or alcohol. Given these economic costs, quitewithout regard to subrogation, public entities possibly can bring direct suits againstmanufacturers for having suffered economic losses on account of what might bethe tortious conduct of the manufacturers themselves. Here, however, the publicentities run into the general rule that in negligence law (and products liability aswell) there is no cause-of-action for the infliction of mere economic loss. To besure, there are a number of important exceptions to that general rule. In addition,the general rule has itself been seemingly overturned by leading opinions in alimited number of states; California happens to be one of those states. TheCalifornia opinion twenty years ago, J'Aire Corp. v. Gregory,2 can plausibly beread as creating a general cause of action for the negligent infliction of economicloss.' Accordingly, in California the public entities' claims may be considerablystronger than they would be in the majority of states.Returning to the tobacco litigation, I can state that never has so much moneychanged hands on account of lawsuits in which the legal theories have been souncertain-not wrong, but rather uncertain. The 1997 global settlement (whichended up failing because of a lack of Congressional implementation) was for a sumof money in excess of $300 billion. The subsequent 1998 settlement betweenstates and tobacco companies is for an amount considerably in excess of$200 billion. The only commentaries I can find on the legal theories that underliethe settlement are one article4 and one student comment,5 which both roughly favorthe states' legal theories, and an Alabama task force report, co-authored by a lawprofessor, which generally disapproves of those theories.6 There has been ascattering of lower-court opinions, which have generally allowed cases to proceed2. 598 P.2d 60 (Cal. 1979).3. See id. at 63.4. See Raymond E. Gangarosa, Frank J. Vandall, & Brian W. Willis, Suits by Public Hospitals toRecover Expenditures for the Treatment of Disease, Injury and Disability Caused by Tobacco andAlcohol, 22 FORDHAM URB. L.J. 81 (1994).5. See Michael K. Mahoney, Comment, Coughing up the Cash: Should Medicaid Provide forIndependent State Recovery Against Third-Party Tortfeasors Such as the Tobacco Industry?, 24 B.C.ENVTL. AFF. L. REF. 233 (1996).6. See William H. Pryor Jr., et al., Report of the Task Force on Tobacco Litigation, 27 CUMB. L.REV. 577 (1996-97). The law professor is Michael DeBow.[Vol. 27: 751, 2000] Cigarette Litigation's OffspringPEPPERDINE LAW REVIEWon some theories, but have rejected other theories. The only state supreme courtruling I am aware of is in Iowa; the Iowa Supreme Court basically threw out theIowa state case.7 The 1997 and 1998 settlements are really amazing in terms ofwhat they include. Settlement money, for example, goes to states like Kentuckyand Alabama that were not even parties to the suits--states that had refused to joinin the litigation efforts. Under the terms of the 1998 settlement, money is nowgoing from tobacco companies to tobacco farmers who will lose sales and revenueon account of the settlement, but whose actual legal rights obviously have not beenviolated by anything that the tobacco companies have done. The future annualpayments that tobacco companies will be making to the states may be adjustedpursuant to a formula which allows the tobacco companies' payments to go downif cigarette sales decline.All of this gives states a very odd incentive to hope for an increase in tobaccosales rather than a decrease. Consider, moreover, companies that might be newentrants into the cigarette market and which might thereby take business away fromthose existing companies who are bound by the expensive terms of the settlement;how can those new companies be prevented from dramatically expanding theirsales? It turns out that the settlement contains terms specifying that tobaccocompanies' payments to states will decline if the market share enjoyed by thosetobacco companies itself declines. Moreover, the settlement requires the states toenact various measures that will make it expensive for new companies to gain entryinto state tobacco markets. This, then, is a settlement that obviously raisesquestions about the violation of the competitive norms established by variousantitrust statutes.'Given all the oddities in the settlement, one could possibly complain aboutirresponsible appellate courts making bad law, and about irresponsible juriescoming in with inappropriate verdicts. But once again, there have in fact been nostate supreme court opinions that have endorsed the state claims. In addition, therehave been no jury verdicts in favor of those claims-though a jury was in factdeliberating the Minnesota case at the time that this case was settled. However badthe litigation results might possibly be, those results have been a matter ofvoluntary settlements on the part of the tobacco industry. These are settlementsthat are particularly surprising because until now tobacco companies have beenfamous for hanging tough, for having out-prepared, outspent, and out-hustledplaintiffs (and their lawyers) at every turn in the previous rounds of individuallitigation.7. See State v. Phillip Morris, Inc., 577 N.W.2d 401 (Iowa 1998).8. See the overview provided in Jeremy Bulow & Paul Klemperer, THE TOBAcco DEAL,BROOKINGS PAPERS ON ECONOMIC AcTIvITY 323 (Martin N. Baily et al. eds., 1999).755Why then this dramatic change in tobacco companies' litigation strategy? Oneexplanation focuses on the dynamics of the state suits. In those suits, the plaintiffs'side was very well prepared and very well financed. A separate explanation is thatin these new state suits, the states were able to take advantage of internal companydocuments suggesting the irresponsibility of the tobacco companies. A thirdexplanation is that tobacco companies had simply become weary of being chargedwith corporate irresponsibility; they may have wanted, by entering into thesettlement, to declare that "we are now responsible corporate citizens rather thancorporate outlaws."If, however, the latter has been the industry's strategy, my estimate is that thisstrategy is failing or backfiring. The willingness of tobacco companies to pay $300billion (or $200 billion) seems to have entailed a kind of public acknowledgmentby the companies of their own guilt and responsibility. This is a public acknowl-edgment that makes those companies more vulnerable, rather than less vulnerable,to other kinds of legal challenges. The companies' implicit acknowledgment oftheir responsibility in the state settlement may well have contributed to the $51million verdict in an individual smoker's claim in San Francisco just a coupleweeks ago.' This is a verdict which, including punitive damages, would have beenseverely regulated by the 1997 settlement, but which is unaffected by anything inthe terms of the 1998 settlement.Overall, as I consider the state suits, what I think we are seeing is a new kindof legal proceeding. This proceeding entails, first of all, a shift from private lawto public law. Secondly, the proceedings seem less concerned with precise legaltheories, and more concerned with a kind of public melodrama. I am told thatbefore the state suits were filed, a meeting of state attorneys general was convenedby Mark Moore, the Attorney General of Mississippi. Those attorneys generalwere inclined to ask, "What are the elements of the causes of action that we'realleging here?" Attorney General Moore basically responded by saying, "Forgetthe elements. Let me show you the internal company documents that will helpmobilize jury sentiment in favor of our cases." It seems clear that the publicperception of tobacco company misbehavior has played a very large role in thecompanies' belief that these are cases they might well lose, and therefore shouldbe inclined to settle.In comparing the tobacco litigation to the alcohol litigation and also the gunlitigation, one can easily say that it is the apparent misbehavior of tobaccocompanies that enables the tobacco litigation to stand apart. Even the Wall StreetJournal editorialized a while ago to the effect that there should be a special placein hell for tobacco company executives. (To be sure, the Journal went on to saythat there should also be a special place in hell for overly aggressive trial lawyers.)9. See Myron Levin, Tobacco Firm Liable in Cancer Case, L.A. TIMES, Feb. 10, 1999, at Al;Joseph Menn & Myron Levin, Jury Awards $50 Million in Tobacco Case, L.A. TIMES, Feb. 11, 1999,at Al. The verdict was about $1 million in compensatory damages and then $50 million in punitivedamages.756[Vol. 27: 751, 2000] Cigarette Litigation's OffspringPEPPERDINE LAW REVIEWIt is hard to identify a special place in hell for the executives of alcohol companies,or for that matter auto makers, even though those companies' products entail a veryhigh injury rate. As for gun manufacturers, a year ago most of us would have beeninclined to say that their behavior has not been seriously problematic. On accountof litigation, however, we are now learning about possible instances of misbehav-ior, including the adoption of marketing strategies that may be designed tocircumvent state regulatory efforts. We learn more about these strategies in DeniseDunleavy's contribution to this symposium.757

Cigarette Litigation\u27s Offspring: Assessing Tort Issues Related to Guns, Alcohol, & Other Controversial Products In Light of the Tobacco Wars

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Cigarette Litigation\u27s Offspring: Assessing Tort Issues Related to Guns, Alcohol, & Other Controversial Products In Light of the Tobacco Wars

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