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Graham v. R.J. Reynolds Tobacco Co.

United States Court of Appeals, Eleventh Circuit

April 8, 2015

EARL E. GRAHAM, as PR of Faye Dale Graham, deceased, Plaintiff - Appellee,
v.
R.J. REYNOLDS TOBACCO COMPANY, individually and as successor by merger to the Brown and Williamson Tobacco Corporation and the American Tobacco Company, PHILIP MORRIS USA, INC., Defendants - Appellants, LORILLARD TOBACCO COMPANY, et al., Defendants

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[Copyrighted Material Omitted]

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Appeal from the United States District Court for the Middle District of Florida. D.C. Docket No. 3:09-cv-13602-MMH-JBT.

For EARL E. GRAHAM, as PR of Faye Dale Graham, deceased, Plaintiff - Appellee: Elizabeth Joan Cabraser, Jordan S. Elias, Richard M. Heimann, Kent L. Klaudt, Sarah Robin London, Jerome Mayer-Cantu, Scott Purington Nealey, Robert J. Nelson, Lieff Cabraser Heimann & Bernstein, LLP, San Francisco, CA; Samuel Issacharoff, New York University School of Law, New York, NY; Frederick C. Baker, Rebecca M. Deupree, Lance V. Oliver, Motley Rice, LLC, Mount Pleasant, SC; Kathryn E. Barnett, Kenneth S. Byrd, Lieff Cabraser Heimann & Bernstein, LLP, Nashville, TN; Janna M. Blasingame, Stephanie J. Hartley, Richard Lantinberg, Edward I. Warren, Norwood Wilner, The Wilner Firm, PA, Jacksonville, FL; Charles Easa Farah Jr., Farah & Farah, PA, Jacksonville, FL; Jennifer Gross, Lieff Cabraser Heimann & Bernstein, LLP, New York, NY; Donald Alan Migliori, Motley Rice, LLC, Providence, RI.

For R.J. REYNOLDS TOBACCO COMPANY, individually and as successor by merger to the Brown and Williamson Tobacco Corporation and The American Tobacco Company, Defendant - Appellant: Gregory G. Katsas, Hilary R. Mehrkam, Jones Day, Washington, DC; Stephanie Ethel Parker, David M. Monde, Jones Day, Atlanta, GA; Keri Arnold, Arnold & Porter, LLP, New York, NY; Cecilia M. Bidwell, Bonnie C. Daboll, Cathy Ambersley Kamm, James B. Murphy Jr., Terri Lynn Parker, Shook Hardy & Bacon, LLP, Tampa, FL; Dana G. Bradford II, Smith Gambrell & Russell, LLP, Jacksonville, FL; Andrew Brenner, Mark Jurgen Heise, Boies Schiller & Flexner, LLP, Miami, FL; Joshua Reuben Brown, Greenberg Traurig, LLP, Orlando, FL; Paul D. Clement, Bancroft, PLLC, Washington, DC; Karen C. Dyer, Boies Schiller & Flexner, LLP, Orlando, FL; Timothy James Fiorta, Jones Day, Cleveland, OH; William Patrick Geraghty, Shook Hardy & Bacon, LLP, Miami, FL; Khalil Gharbieh, David E. Kouba, Arnold & Porter, LLP, Washington, DC; Stacey Koch Lieberman, Hughes Hubbard & Reed, LLP, Miami, FL; Charles Richard Allan Morse, Jones Day, New York, NY; Robert B. Parrish, Moseley Prichard, Parrish Knight & Jones, Jacksonville, FL; J. W. Prichard Jr., David C. Reeves, Moseley Prichard, Parrish Knight & Jones, Jacksonville, FL; Kenneth J. Reilly, Stephanie Sowers Sankar, Connor Jay Sears, Shook Hardy & Bacon, LLP, Kansas City, MO; John M. Walker, John F. Yarber, Jones Day, Atlanta, GA; Jeffrey Alan Yarbrough, Moseley Prichard, Parrish Knight & Jones, Jacksonville, FL; Stephen N. Zack, Boies Schiller & Flexner, LLP, Miami, FL.

For Philip Morris USA, Inc., Defendant - Appellant: Lauren R. Goldman, Mayer Brown, LLP, New York, NY; Keri Arnold, Michael Craig German, Ingo Sprie Jr., Arnold & Porter, LLP, New York, NY; Renee Tyndell Beaver, Judith Bernstein-Gaeta, Khalil Gharbieh, Peter T. Grossi, Brittany E. Hamelers, David E. Kouba, M. Sean Laane, Derek Read Molter, Carolyn A. Pearce, Michael S. Tye, Arnold & Porter, LLP, Washington, DC; Cecilia M. Bidwell, Bonnie C. Daboll, James B. Murphy Jr., Terri Lynn Parker, Shook Hardy & Bacon, LLP, Tampa, FL; Dana G. Bradford II, Smith Gambrell & Russell, LLP, Jacksonville, FL; Andrew Brenner, Mark Jurgen Heise, Patricia Melville, Stephen N. Zack, Boies Schiller & Flexner, LLP, Miami, FL; Joshua Reuben Brown, Greenberg Traurig, LLP, Orlando, FL; Karen C. Dyer, Boies Schiller & Flexner, LLP, Orlando, FL; Roger C. Geary, Robert D. Homolka, Brian Alan Jackson, Cathy Ambersley Kamm, Stephanie Sowers Sankar, Connor Jay Sears, Shook Hardy & Bacon, LLP, Kansas City, MO; William Patrick Geraghty, Kenneth J. Reilly, Hildy M. Sastre I, Shook Hardy & Bacon, LLP, Miami, FL; Stacey Koch Lieberman, Hughes Hubbard & Reed, LLP, Miami, FL; Thomas W. Stoever Jr., Arnold & Porter, LLP, Denver, CO.

Before TJOFLAT, JILL PRYOR and COX, Circuit Judges.

OPINION

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TJOFLAT, Circuit Judge:

In 1996, a Florida District Court of Appeal approved certification of a class-action lawsuit originating in the Circuit Court of Dade County that encompassed an estimated 700,000 Floridians who brought state-law damages claims against the major American tobacco companies for medical conditions, including cancer, " caused by their addiction to cigarettes that contain nicotine." R.J. Reynolds Tobacco Co. v. Engle (" Engle I " ), 672 So.2d 39, 40 (Fla. 3d Dist. Ct.App. 1996) (quotation marks omitted). A year-long, class-wide trial was conducted on the issue of liability, and " the jury rendered a verdict for the class on all counts." Liggett Grp. Inc. v. Engle (" Engle II " ), 853 So.2d 434, 441 (Fla. 3d Dist. Ct.App. 2003). The Florida Supreme Court then decertified the class but held that the jury findings would nonetheless have " res judicata effect" in cases thereafter brought against one or more of the tobacco companies by a former class member. Engle v. Liggett Grp., Inc. (" Engle III " ), 945 So.2d 1246, 1269 (Fla. 2006) (per curiam).

Here, a member of that now-decertified class--a so-called Engle -progeny plaintiff--successfully advanced strict-liability and negligence claims that trace their roots to the original Engle jury findings. Over the defendants' objection, the District Court instructed the jury that " you must apply certain findings made by the Engle court and they must carry the same weight they would have if you had listened to all the evidence and made those findings yourselves." Among them: that the defendants " placed cigarettes on the market that were defective and unreasonably dangerous" and that " all of the Engle [d]efendants were negligent."

When the jury found in favor of the plaintiff on both claims, the defendants renewed their motion for a judgment as a matter of law, contending, among other things, that federal law preempted the jury's imposition of tort liability as based on the Engle jury findings. The District Court denied the motion, and the defendants appealed. We must decide whether federal law preempts this suit because it stands as an obstacle to the purposes and objectives of Congress.

I.

A.

Like so many of her generation, Faye Graham started each morning with a cup of coffee and a smoke. By day's end, she usually burned through one-and-a-half to two packs of cigarettes. According to her brother, " she smoked right on up until she wasn't able to smoke." Doctors diagnosed Graham with non-small cell lung cancer.

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She died on November 18, 1993, at age fifty-eight.

Faye was survived by her husband, Earl Graham, a tugboat captain. He filed, as personal representative of his wife's estate, a wrongful-death suit against R.J. Reynolds Tobacco Co. and Phillip Morris USA, Inc. (" R.J. Reynolds" and " Phillip Morris" )[1] in the United States District Court for the Middle District of Florida.[2] Among other things, the complaint alleged that Faye Graham was addicted to cigarettes manufactured by the defendants and that the addiction caused her death. The complaint contained seven counts, two of which are relevant to this appeal: a strict-liability claim, based on the fact that " the cigarettes sold and placed on the market by [the defendants] were defective and unreasonably dangerous," and a negligence claim, based on the fact that the defendants were negligent " [w]ith respect to smoking and health and the manufacture, marketing and sale of their cigarettes."

B.

1.

This is no ordinary tort suit, however: Graham's is an Engle -progeny case. The Engle litigation epic began in 1994, when six Floridians filed a putative class-action lawsuit seeking over $100 billion in both compensatory and punitive damages against the major domestic tobacco companies: Philip Morris, Inc.; R.J. Reynolds Tobacco Co.; Brown & Williamson Tobacco Co., individually and as successor by merger to The American Tobacco Company; Lorillard Tobacco Co.; and Liggett Group, Inc. Engle II, 853 So.2d at 441 & n.1. Two years after the plaintiffs filed their initial complaint, the Third District Court of Appeal approved class certification on interlocutory appeal, defining the class as " all Florida citizens and residents" " and

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their survivors, who have suffered, presently suffer or who have died from diseases and medical conditions caused by their addiction to cigarettes that contain nicotine." Engle I, 672 So.2d at 40, 42 (alteration omitted) (quotation marks omitted). The class included an estimated 700,000 members. Engle II, 853 So.2d at 442.

The trial court charged with managing this class action devised a trial plan consisting of three phases. In Phase I, the court conducted a year-long trial on " common issues relating exclusively to defendants' conduct and the general health effects of smoking." Id. at 441. At the trial's conclusion, " the jury rendered a verdict for the class on all counts." Id.

To reach that verdict, the jury answered special interrogatories submitted by the Phase I trial court, at least two of which concerned the claims litigated here: First, did each tobacco company " place cigarettes on the market that were defective and unreasonably dangerous" ? Walker v. R.J. Reynolds Tobacco Co., 734 F.3d 1278, 1282 (11th Cir. 2013). And second, did each tobacco company " fail to exercise the degree of care which a reasonable cigarette manufacturer would exercise under like circumstances" ? Id. (alteration omitted). The tobacco companies argued that these questions " did not ask for specifics about the tortious conduct of the tobacco companies, rendering the jury findings useless for application to individual plaintiffs." Id. (alterations omitted) (quotation marks omitted). But the trial court overruled their objection, and the jury answered " yes" to both questions. Id.

In Phase II, the same jury found the tobacco companies liable for the injuries of three class representatives, awarded them compensatory damages of $12.7 million, and calculated punitive damages for the entire class to be $145 billion. Engle II, 853 So.2d at 441. Before the trial reached Phase III, in which new juries were to have decided individual causation and damages claims for the 700,000 class members, id. at 442, the Third District Court of Appeal decertified the class and vacated the class-wide punitive-damages award, id. at 450, 456.

The class appealed, and the Florida Supreme Court affirmed the Third District Court of Appeal's decision to decertify the class and to vacate the punitive-damages award. [3] Engle III, 945 So.2d at 1268 (explaining that " continued class action treatment . . . is not feasible because individualized issues such as legal causation, comparative fault, and damages predominate" ). Following decertification, the court reasoned that " [c]lass members can choose to initiate individual damages actions and the Phase I common core findings . . . will have res judicata effect in those trials." Id. at 1269. In particular, the Florida Supreme Court approved affording the following Phase I findings res judicata effect:

(i) [T]hat smoking cigarettes causes certain named diseases including COPD and lung cancer; (ii) that nicotine in cigarettes is addictive; (iii) that the Engle defendants placed cigarettes on the market that were defective and unreasonably dangerous; (iv) that the Engle defendants concealed or omitted material information not otherwise known or available knowing that the material was false or misleading or failed to disclose a material fact concerning the health effects or addictive nature of smoking cigarettes or both; (v) that the Engle defendants agreed to conceal or omit

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information regarding the health effects of cigarettes or their addictive nature with the intention that smokers and the public would rely on this information to their detriment; (vi) that all of the Engle defendants sold or supplied cigarettes that were defective; (vii) that all of the Engle defendants sold or supplied cigarettes that, at the time of sale or supply, did not conform to representations of fact made by said defendants; and (viii) that all of the Engle defendants were negligent.

Phillip Morris USA, Inc. v. Douglas, 110 So.3d 419, 424--25 (Fla. 2013) (alterations omitted) (footnote omitted) (quotation marks omitted) (quoting Engle III, 945 So.2d at 1276--77 (Fla. 2006)). But what, exactly, does that mean?

2.

After the Florida Supreme Court decided Engle III, individual members of the defunct class scattered, making their way into both state and federal courts. Uncertainty about the Phase I findings abounded. In fact, three Florida District Courts of Appeal, joined by the United States District Court for the Middle District of Florida and a panel of our court, produced a four-way split as to how the Phase I findings should inform Engle -progeny cases in light of Engle III. The disagreement centered on two open questions: first, whether Engle III' s use of the term " res judicata" referred to issue preclusion or claim preclusion; and second, how juries should assess the causation element of an Engle -progeny plaintiff's claim.

a.

Our court issued the first opinion on the subject. In Brown v. R.J. Reynolds Tobacco Co., 611 F.3d 1324 (11th Cir. 2010), we recognized that the term " res judicata" can refer to " claim preclusion, to issue preclusion, or to both." Id. at 1332. We understood Engle III as referring to issue, not claim, preclusion " [b]ecause factual issues and not causes of action were decided in Phase I." Id. at 1333. Noting that " issue preclusion only operates to prevent the re-litigation of issues that were decided, or 'actually adjudicated,' between the parties in an earlier lawsuit," id. at 1334 (citation omitted), we permitted an Engle -progeny plaintiff to rely on the Phase I jury findings to the extent he could show " to a reasonable degree of certainty that the jury made the specific factual determination that is being asserted," id. at 1335.

To do so, an Engle plaintiff would bear the burden of rummaging through the Phase I trial record and identifying " specific parts of it to support [his] position." Id. But our court declined " to address whether [the Phase I] findings by themselves establish any elements of the plaintiffs' claims," observing only that such an inquiry would be " premature" " [u]ntil the scope of the factual issues decided in the Phase I approved findings is determined." Id. at 1336. We directed the district court on remand

to determine, for example, whether the jury's [strict-liability finding] establishes only that the defendants sold some cigarettes that were defective and unreasonably dangerous, or whether the plaintiffs have carried their burden of showing to a reasonable degree of certainty that it also establishes that all of the cigarettes that the defendants sold fit that description.

Id. We eyed this task skeptically, though, noting that " plaintiffs have pointed to nothing in the record, and there is certainly nothing in the jury findings themselves" to support the conclusion that " all cigarettes the defendants sold were defective and unreasonably dangerous because there is nothing to suggest that any type or brand of cigarette is any safer or less

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dangerous than any other type or brand." Id. at 1335.

b.

The First District Court of Appeal disagreed. R.J. Reynolds Tobacco Co. v. Martin, 53 So.3d 1060, 1067 (Fla. 1st Dist. Ct.App. 2010). The First District found it unnecessary to distinguish between claim and issue preclusion and held that an Engle plaintiff need not " trot out the class action trial transcript to prove applicability of the Phase I findings." Id. As a result, " [t]he common issues, which the [Phase I] jury decided in favor of the class, were the 'conduct' elements of the claims asserted by the class, and not simply . . . a collection of facts relevant to those elements." Id. Under this reading, a plaintiff thus had no burden to prove, to a reasonable degree of certainty, that the Phase I jury had actually decided the factual issue relevant to his claim--for example, how the cigarettes that the plaintiff smoked were defective or negligently designed.

The Martin court supported this conclusion by referencing the Final Judgment and Amended Omnibus Order entered by the Phase I trial judge in denying the tobacco companies' motion for a directed verdict. Id. at 1068 (citing Engle v. R.J. Reynolds Tobacco Co. (" Engle F.J. " ), No. 94-08273 CA-22, 2000 WL 33534572, at *1 (Fla. Cir. Ct. Nov. 6, 2000)). The Martin court read Engle F.J. to " set[] out the evidentiary foundation for the Phase I jury's findings . . . and demonstrate[] that the verdict is conclusive as to the conduct elements of the claims." Id. [4] This meant that " individual Engle plaintiffs need not independently prove up those elements [established by the Phase I findings] or demonstrate the relevance of the findings to their lawsuits, assuming they assert the same claims raised in the class action." Id. at 1069. In short, the plaintiffs had already proved the duty and breach elements of their tort claims.

As for causation, the Martin court affirmed the following jury instruction:

The first issue for your determination is whether [the plaintiff] was a member of the Engle class. In order to be a member of the Engle class, the plaintiff must prove that [he] was addicted to R.J.

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Reynolds cigarettes containing nicotine, and, if so, that his addiction was the legal cause of his death. Addiction is a legal cause of death if it directly and in a natural and continuous sequence produces or contributes substantially to producing such death so that it can reasonably be said that, but for the addiction to cigarettes containing nicotine, the death would not have occurred.

Id. at 1069 (alterations omitted) (quotation ...


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