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cc RA1-;r*=P--WN':E.: ~R PASSPORT TO LAL)ccA1TS A guide to U. S, litigation affecting the tobacco industry. By Lars Hundley A nti-tobacco trends that begin in the United States usually make their way around the world sooner or later. With that in mind, litigation affecting the tobacco industry in the U.S. becomes an issue for those outside the country as well. Tobacco Reporter spoke with Dan Donahue, deputy general counsel at R.J. Reynolds Tobacco Co., about some major lawsuits that tobacco faces in the U.S., and what they mean to the industry. LAWSUIT CATEGORIES. Lawsuits in which tobacco companies are defen- dants fall into several major cate- gories: class action suits involving nicotine "addiction," ETS (environ- mental tobacco smoke) suits, and state recovery of health care costs resulting from "smoking-related" dis- eases. On the other end of the spectrum are lawsuits in which tobacco interests are plaintiffs. These include lawsuits that challenge the Environmental Protection Agency's classification of ETS as a carcinogen and those chal- lenging Food and Drug Administration regulation of cigarettes as a drug. CLASS ACTION. One of the biggest and most encompassing class action lawsuits is Castano u American Tobacco Co. This is the case brought on by all "nicotine dependent" people. A nico- tine-dependent person is defined as someone who has been diagnosed as such by a medical care practitioner, or someone who has been advised by a medical care practitioner to stop smoking but has continued to do so. "That broad definition would sweep up virtually every smoker, because the Surgeon General's warn- ing that appears on each pack of ciga- rettes and in the advertising material could constitute advice from a med- ical care practitioner that someone should stop smoking," says Donahue. "So, you have in the Castano case a lawsuit that is brought as a class action, naming as the class virtually every person who currently smokes and a large number of people who ever smoked in the past, seeking to recover as damages the value of their claim that they are 'addicted."' The suit does not seek damages for "tobac- co-related" diseases. Tobacco companies have chal- lenged the case's class certification, maintaining that the overriding indi- vidual issues unique to each person in the class cannot be resolved without individual trials of those issues. The 5th Circuit Court of Appeals has agreed to hear the challenge. "We took the position-and we believe strongly-that as certified, this was a totally unwieldy and unman- ageable case," asserts Donahue. "From a lay rnan's standpoint you could say it really doesn't make any sense." Two other important class action cases, Broin v. Philip Morris and Engle v. R.J. Re,vnolds, are in litigation at the state level in Florida. Certification of both of these cases as class action is also under appeal. "Each of these cases involve the same general principles as are involved with the Castmio case," says Donahue. ETS CASES. "We have four of these, and the most prominent is the Butler v. R.J. Reynolds case in Mississippi," says Donahue. "It's a case, brought by the estate of Burl Butler, a barber and nonsmoker, which contends thai he 48 Tn October 1995

developed lung cancer and died as a consequence of his customers smok- ing cigarettes in his barbershop." The case is still in the discovery phase and has not yet been set for trial. The significant difference in princi- ple between the Butler case and other smoking and health cases is that the plaintiff contends that exposure to environmental tobacco smoke caused Butler to develop a disease instead of the act of smoking. "Our position in the ETS cases is that the scientific evidence is simply not up to the task of supporting the conclusion that exposure to environ- mental tobacco smoke either can cause lung cancer or, more important- ly, in fact did cause lung cancer in a given individual," says Donahue. In the Butler case, for example, Mr. Butler also regularly used talc in his barbershop, which has been shown in some epidemiological studies to increase the risk of lung cancer by three to six times. "So you have this confounding factor-was it using talc or was it environmental tobacco smoke that was related to his prob- lem?" asks Donahue. Two other issues also play a role in the case. First, the tobacco industry has no right or ability to control the method of use of its products once they have been sold. Second, tobacco manufacturers can- not be held responsible for the smok- ing policies in the plaintiff's barber- shop. THE SCIENCE OF ETS. The Butler case brings up the issue of whether or not environmental smoke is truly a car- cinogen-as declared by the Environmental Protection Agency. This declaration is refuted by the tobacco industry, as well as 13 of 14 American epidemiological studies on the subject. Philip Morris, R.J. Reynolds, a vending machine compa- ny and a flue-cured tobacco growers' group have filed suit together against the EPA. The suit maintains that the report on ETS was beyond the regula- tory authority of the EPA, and that the classification was arbitrary and unsupported by scientific evidence. "The Environmental Protection Agency conducted perhaps the most extensive and, we would say, convo- luted and unique review of environ- mental tobacco smoke epidemiology that's ever been conducted, and con- cluded that the risk of developing lung cancer as a result of being exposed to environmental tobacco smoke is greater than if you are not exposed to it, but that the risk is infinitesimally small," explains Donahue. "Until the EPA's report came along, the generally accepted rule of thumb was that unless an increased relative risk was at least 3.0, it had no signifi- cance. "When it comes to environmental tobacco smoke, the rules were essen- tially thrown out the window and the EPA concluded that an elevated risk of 1.19 was enough to allow them to classify ETS as a class-A known human carcinogen." Two key rulings have been made in the case against EPA motions. The first ruling decided that the classification could be challenged in court by the tobacco industry. The second ruling decided that the industry did suffer an economic injury and had the right to file suit. "We took the position that it was the clear intent of the EPA, when it classified ETS, to put into the record a basis on which others could regulate smoking," explains Donahue. The court will look at all of the evi- dence that was available to the EPA at the time of the study and decide if its decision to classify ETS as a group-A carcinogen was capricious. FDA REGULATION. All five major American tobacco companies and a North Carolina advertising agency have challenged in court the August pronouncement by the FDA that it will regulate cigarettes as a "drug." "We believe that the FDA is simply wrong and that the decisions of the courts and all the previous FDA com- missioners before David Kessler uni- formly point to the conclusion that they do not have the authority to reg- ulate cigarettes," says Donahue. MEDICAID. Four separate state attor- neys general in West Virginia, Minnesota, Florida and Mississippi have filed suit against the industry to recover what they claim are expenses that their respective states have allegedly incurred in medical treat- ment of tobacco-related diseases. "Under the Medicaid program, var- ious different states pay different per- centages of the cost of the overall pro- gram," says Donahue. "For example, in Mississippi the federal government pays 78 percent and the state pays 22 percent." The states that have filed suit take the position that when used as intended, cigarettes are a product that cause disease. Therefore, they contend that the industry should have to bear the risk of these costs. "Sounds good from the standpoint of politics, but it makes terrible legal sense from the standpoint of public policy," explains Donahue. "To understand why, take the argu- ment one step further. When cars and trucks are used as intended,_they cause wear and tear on public roads and highways, which the state pays to maintain. Supermarkets sell products that produce garbage when used as intended, and the states have to pay to collect that garbage. The implica- tions of the suit are enormous. "For some reason, they think that for the tobacco industry, the rules should be different," says Donahue. In fact, Florida did change the rules when it introduced a law making it easier for the state to recover damages. But a circuit judge declared that the law can be applied only to conduct or activities after July 1, 1994, when the law was introduced, which severely limits its effectiveness. Donahue estimates that it will take two to three years before any of the state Medicaid cases could even go to trial. m