Castano v. American Tobacco Co.
(Class Action, US Dist. Ct. E. LA 1994 Dismissed) Related Cases: Scott v. ATC; Chamberlain v. ATC Citation: 870 F.Supp. 1425 (22 Sep 1994 denying motion to dismiss); 160 F.R.D. 544 (17 Feb 1995); 879 F.Supp. 594 (14 Mar 1995 denying motion to enjoin deposition); 162 F.R.D. 112 (15 May 1995 granting motion for interlocutory certification appeal); 889 F.Supp. 904 (23 Jun 1995 modifying stay order); 896 F.Supp. 590 (27 Jul 1995 denying objection to dissemination of privilieged documents); 908 F.Supp. 378 (18 Dec 1995 denying discovery order); 84 F.3d 734 (23 May 1996); 961 F.Supp. 953 (21 Feb 1997 denying summary judgment); 1997 WL 360962 (E.D.La. 6 June 1997 denying immediate prescription appeal)This class action suit was filed by representative plaintiffs Dianne A. Castano, as representative of her deceased husband Peter Castano, Ernest R. Perry, Sr., T. George Solomon, Jr., Gloria Scott, and Deania Jackson, through a consortium of approximately 60 plaintiffs' law firms against American Tobacco Co., American Brands, R.J. Reynolds, Brown & Williamson, British American Tobacco, Philip Morris, Liggett, Lorillard, Lowes Corp., United States Tobacco, and the Tobacco Institute on March 29, 1993. Each law firm paid a membership fee of about $100,000 to fund the litigation.
The class was defined as all nicotine-dependent persons in the United States, their estates, and relatives since 1943. The plaintiffs alleged that the defendants fraudulently failed to inform consumers that nicotine was addictive, and manipulated the level of nicotine in their cigarettes to sustain that addiction. The plaintiffs claimed fraud and deceit, negligent misrepresentation, intentional infliction of emotional distress, negligence and negligent infliction of emotional distress, violation of state consumer protection statutes, breach of express warranty, breach of implied warranty, strict product liability and redhibition pursuant to the Louisiana Civil Code. The plaintiffs sought compensatory and punitive damages, attorneys' fees, and equitable relief requiring the defendants to fund notification of all class members that nicotine is addictive, declaring that the defendants manipulated the nicotine levels in their cigarettes, ordering the defendants to disgorge any profits from the sale of cigarettes, ordering restitution, and implementing a medical monitoring fund.
The case was heard in the United States District Court, Eastern District of Louisiana (Civil Action No. 94-1044A) before the Honorable Okla Jones. The judge (160 F.R.D. 544) certified the national class action as to core liability and punitive damages on February 17, 1995. He denied certification as to the plaintiffs' claims for equitable relief including medical monitoring, finding compensatory and punitive damages to be the plaintiffs' primary interest. The judge held that the prerequisites for certification were established: joinder of the tens of millions of potential plaintiffs would be impossible, common issues of law and fact existed, named plaintiffs hold the same or similar legal theories as the class, and the named plaintiffs and attorneys had taken sufficiently active roles in the litigation to show they would protect the interests of the class. The manageability difficulties were outweighed by judicial economy of not trying the thousands of cases that may have spurred from decertification. Common questions predominated as to the core issues of liability (fraud, negligence, breach of warranty, strict liability, consumer protection statute violations), and liability and assessment of punitive damages. Punitive damages could be awarded based on an instruction that some plaintiffs would fail to prove damages and therefore not be entitle, or by affixing a ratio of compensatory to punitive damages. Individual issues predominated regarding injury-in-fact, proximate cause, reliance, affirmative defenses and compensatory damages, precluding certification on those issues. The definition of nicotine-dependant people was sufficient with the exception of anyone with at least one unsuccessful quit attempt.
In an interlocutory appeal, the U.S. Court of Appeals for the Fifth Circuit (84 F.3d 734) decertified the class on May 23, 1996. It ruled that the District Court abused its discretion in certifying the class. A national class action would fail to consider the effects of variations in state law on the requirements of predominance and superiority. The trial court failed to rule on how the trial on the merits would be conducted. The case would be unmanageable with the variations in law and the numerous plaintiffs' interests involved. It was necessary to go beyond the pleadings, to defenses, relevant facts and substantive law, to determine whether class certification was appropriate. The class action was not the superior method to try the case because of the undue pressure it would put on the defendants to settle. The large awards possible in the individual suits justify decertification because it would not be unreasonable to try the cases individually. The court held that the tobacco tort was not yet "mature" enough to warrant a class certification because not enough addiction-as-injury cases had been tried.
In response to the decertification, members of the Castano consortium (known as "Castano P.L.C.") filed more than two dozen putative class actions in state courts. These cases were commonly known as "baby Castano" actions. Only one of those cases, Scott v. American Tobacco Co., et al., proceeded to a trial. The Castano case continued as an individual personal injury suit for the representative plaintiffs.
The United States District Court, Eastern District, Louisiana (961 F.Supp. 953), by way of the Honorable Judge Berrigan, denied the defendants' motion for summary judgment on February 21, 1997. The judge ruled that the claims involved injury of addiction, and that genuine issues of fact regarding the meaning of "addiction", when smokers knew cigarettes were addictive and when smokers discovered the defendants' concealment and manipulation of nicotine levels precluded summary judgment on prescription grounds. Because the plaintiffs realized they were addicted to nicotine more than one year prior to the filing of the lawsuit, the defendants argue that their claims are prescribed by the state law. Prescription did not begin to run until the plaintiffs had a reasonable basis to sue a specific defendant.
In January 1998, the parties agreed to dismiss the action without prejudice and toll the statute of limitations. The defendants paid $5.9 million to reimburse costs and expenses for the plaintiff's counsel. This payment was to be credited against any subsequent action implimenting the resolution.