Tobacco

The Illogical Basis of That $23 Billion Award Against R.J. Reynolds

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On Friday a jury in Escambia County, Florida, decided that R.J. Reynolds should pay $23 billion in punitive damages to Cynthia Robinson, the widow of a smoker who died of lung cancer in 1996. It is not the largest award ever in a case involving a single smoker, but it's close. And like a California jury's 2002 award of $28 billion to a smoker who sued Philip Morris (a sum that the judge later reduced by a factor of 1,000), the case illustrates both the arbitrariness of punitive damages and the implausibility of claiming that tobacco companies managed to conceal the hazards of their products.

Although the main purpose of tort litigation is supposed to be making victims whole, so-called punitive damages explicitly aim to punish wrongdoers. That is usually the function of the criminal justice system, which therefore provides additional protections for defendants, including a higher standard of proof, stricter evidence rules, and penalties prescribed by statute. Attorneys seeking punitive damages do not have to contend with any of those safeguards.

The very concept of punitive damages is oxymoronic, since actual damages (a.k.a. compensatory damages) are a measure of the harm caused by a tort. Punitive damages, by contrast, express a jury's outrage at the defendant's conduct and may be completely unmoored from the injury suffered by the plaintiff (who nevertheless gets the money). In this case, the punitive damages are about 1,400 times the actual damages, which the jury put at $16 million. That huge mutiple seems to violate Florida law, which caps the ratio of punitive to compensatory damages at 3 to 1 (or, in certain circumstances, 4 to 1) unless "the defendant had a specific intent to harm the claimant"—a description that clearly does not apply to a tobacco company with millions of customers, even if it prevented them from making informed decisions by hiding the dangers posed by its products. 

The latter claim, which is central to this sort of lawsuit, is hard to credit. The jury evidently was swayed by evidence indicating that R.J. Reynolds executives questioned the hazards and addictiveness of cigarettes in public while acknowledging them in private. There surely is nothing to admire in that sort of duplicity, but did it actually fool anyone? The first surgeon general's report linking smoking to deadly diseases came out in 1964, and the subject received a great deal of attention during the ensuing decade. By the time Cynthia Robinson's husband began smoking (around the age of 13, according to her testimony, which would have been 1973), every pack of cigarettes carried a warning stating that "The Surgeon General Has Determined That Cigarette Smoking Is Dangerous to Your Health." In 1985 that statement was replaced by rotating warnings referring to specific risks such as lung cancer, heart disease, and ephysema. As for the addictive potential of tobacco, it has been widely acknowledged for centuries, as I show in my book on the anti-smoking movement.

Anyone who began smoking in the 1970s and continued smoking for the next two decades voluntarily assumed the well-known risks associated with the habit. Nothing R.J. Reynolds said or failed to say changes that reality, because it is impossible to conceal common knowledge, no matter how much the tobacco companies might have wished otherwise.

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57 responses to “The Illogical Basis of That $23 Billion Award Against R.J. Reynolds

  1. Those kinds of ginormous verdicts pretty much always get reduced later. Not sure it’s terribly significant.

    1. I think the significance is that it demonstrates that juries can’t always be trusted to make the best legal decisions. They see a poor helpless widow on one side and a giant faceless corporation that sells CIGARETTES! on the other side, so they knee jerk. It really is sad.

    2. One effect of these giant verdicts is that they feed anti-jury propaganda.

      IOW, the judge says to the jurors, “you should wield broad powers to impose huge damages if you’re outraged by the defendant’s behavior,” and when juries do precisely that, it means jurors are irrational and stupid.

      Maybe it means that judges are putting inappropriate tasks onto the jurors, tasks which could not efficiently be performed by a Solomon or a Cardozo.

      “Wow, juries keep wielding the dumb powers we give them – the juries are unreliable! But of course we can’t trust jurors with the power to judge the law!”

      1. The problem is, jurors aren’t cynical hacks who have Seen It All, they are going out of the usual routine of their lives to perform a function their civics books and the judges tell them is very important. If the judges tell them to follow a narrow set of criteria, they will probably do so. If judges tell them to make broader decisions about what feels just to them, they’ll do that too.

        Keep them within the confines of the actual dispute, and of the law, and I bet their record will compare favorably with the record of any hack judge.

        1. Well that’s a good point. Obviously crazy judges make insane decisions also. But at the same time, there’s clearly a huge emotional component that goes into the judgement. It’s irrational to award 23 billion for this suit, so something clearly went wrong…

          1. I think what went wrong is to tell the jurors to make decisions unmoored from specific legal standards, but to go with their sense of justice instead.

            It would be asking a bit much of human nature to tell people they have all this power and then to be indignant when they wield this power on behalf of a sympathetic widow.

            1. but to go with their *own personal standards* of justice instead.

            2. Perhaps you’re right. I gotta say, I’m surprised that in such a conservative county they were able to get unanimity in a 23 billion dollar award against RJ Reynolds though…

              1. I thought civil suits didn’t require unanimity.

                1. Oh, well that just shows my ignorance on the whole matter then!

          2. I disagree. What is a $23 billion award? It’s a potential death sentence for a company.

            What do we do with humans who kill someone?

            Sometimes they get the death penalty too.

            It’s not “crazy” to kill a company that lied and killed thousands of people.

            1. Exactly the kind of reasoning I’d expect from someone named Bambi!

  2. “R.J. Reynolds should pay $23 billion in punitive damages to Cynthia Robinson, the widow of a smoker who died of lung cancer in 1996”

    This totally explains why my girlfriend dumped me after I quit smoking!

  3. I heard about it Saturday night at a party – where I was one of the few people not smoking. It got lots of hoarse phlegmy laughs.

  4. While the concept of punitive damages is oxymoronic there is an argument for keeping them.

    The problem is there is no legitimate reason for the plaintiff or their attornies to recieve even 1 dime from them. It is also dangerous for that money to flow to either the courts or the government.

    What should happen is if punitive damages are called for in the case and awarded 100% of the proceeds should be directed to charities related to the case at hand or if there are none as dictated by the court.

    So in this case (ignoring the validity of the case in and of itself) once the court gets down adjusting the punitive damage award to something reasonable what would happen is the woman gets $16 million to split with her lawyers and RJR pays $60 million to the American Cancer society. The woman and the lawyers do not get a penny of it.

    1. If the damages are excessive, they’re excessive for the ACS too. If the damages are unreasonable, overturn them. If the damages are reasonable, give them to the injured party and to the attorneys who worked to obtain justice in the case.

    2. There’s no easy answer, and any solution about where the money should go can bring its own type of corruption to these cases, but one thing that doesn’t make sense are punitives for global behavior all going to a plantiff, with 40% or so to the fucking lawyers. Yes, that’s all we need.

      1. Make that a “plaintiff.”

    3. The American Cancer Society is another wasteland of derpitude. Moving punitive damages to this sort of organization would result in a whole new industry of Griefers.

    4. Why not send them back to taxpayers instead. It goes into a giant fund and at the end of the year every american citizen gets an equal cut. Spread out between all 300 million civilians the cash won’t be enough to convince people to go out of their way to demand more.

      1. Better idea: Why not send the money back to current smokers? After all, should this or any punitive award stand, the company won’t be paying it, the customers (i.e. smokers) will via higher prices.

    5. Better yet, confiscate the money and BURN it. Offset some portion of what the Fed is doing to the money supply. Yeah, $23 billion is only a weeks’ worth of repair? but it’s a start.

  5. Punitive damages above 10X actual damages have also been declared presumptively unconstitutional by the US Supreme Court (absent truly abhorrent behavior).

  6. So the “victim” was born in ’60 (three years later than I was) and died in 96 (at the age of 36) from smoking related illnesses. Sounds like the stupid fucker got what he deserved.

    1. Jesus, how many packs a day was he smoking??

  7. But, yeah, if you were smoking in the 1980s and 1990s, you should have known better. Yeah, you were probably addicted and quitting would have been extremely difficult; but I’m sure much easier than dying of some horrible disease caused by smoking.

    1. Nah, dying of a horrible disease is easy, if unpleasant. Anyone can do it.

  8. Why not a billion trillion dollars?

  9. In this case, the punitive damages are about 1,400 times the actual damages, which the jury put at $16 million.

    That $16mm is also too high, probably by about an order of magnitude.

    1. by about 16mm

  10. We the jury find for the plaintiff in the amount of one…..hundred…billion…dollars.
    -Jury Foreman Dr. Evil

  11. We no longer,live,in an age of,personal responsibility when a person can start smoking after the surgeon generals warning was affixed on every pack of,cigarettes and his widow can be awarded anything above the amount of $0.00 eight years after his death at the age of 36.

    1. The widow should have sued the local school district and the teacher’s union for failing to teach the “victim” how to read standard English. It’s obvious that without the means to read the warning he couldn’t have known back in the dark ages of the 70s, 80s, and 90s that smoking might actually hurt you.

      1. I’m suing Oneida because forks made me fat.*

        *Metaphorically speaking. I’m not fat. Hey maybe I could sue them because I’m skinny!

        1. It’s Not My Fault!

    2. It’s interesting to see a libertarian argue that a government approved sticker on a product should guarantee that product and its maker immunity from suit.

      1. No. Reynolds should have been found not liable (and certainly should not have had punitives levied against it) even if there hadn’t been a government-mandated warning. The fact that there was one just underscores how ludicrous this verdict was.

        1. Except they LIED about the product and they LIED about the danger and they induced people to use a product they knew was dangerous.

          If the tobacco companies had come clean as soon as they knew tobacco could kill you, then I think punitive damages entirely inappropriate. But given that they LIED after they knew better – I say kill the company and imprison those who lied.

  12. “$23 Billion award against R.J. Reynolds”

    In the immortal words uttered in another Florida courtroom: “that’s real retarded, sir.”

  13. There is nothing un-libertarian with the theory of punitive damages. In fact they are a well established part of property law going back hundreds of years. One theory is that a perfect punishment or damages are equal to the damage the action caused divided by the probability of getting caught and punished. In that way society is indifferent to wrong doing.

    Furthermore the headline settlement amount is huge, but will be massively reduced outside. The Liebeck v. McDonald’s “hot coffee” case was reduced to $640k from the headline multi-million dollar number. Settlement caps are thinly veiled corporatism that I am surprised (and a little disappointed) that Reason hasn’t written more about.

    1. There is nothing un-libertarian with the theory of punitive damages.

      I’m sure you could have a punitive damages system that is libertarianish. This one isn’t, though.

      Part of the problem is that punitives are punishment, and our legal system isn’t supposed to punish you unless you have had the benefit of a criminal trial with a “reasonable doubt” standard.

      There are others, but to me that’s a hard one to get over.

    2. Why are settlement caps corporatism? I think that punitive damages past a certain point should require the safeguards present in a criminal trial.

      1. “Why are settlement caps corporatism? I think that punitive damages past a certain point should require the safeguards present in a criminal trial.”

        One of the tenants of a libertarian system are well defined property laws. Settlement caps (in general like we have) create an adverse system where parties can cause others’ economic loss and be shielded from making them whole. GW junior ran on a settlement cap platform for Texas Governor, received campaign contributions from large corporations, became governor and passed laws that by definition act only to benefit those same large corporations (other parties would never reach the caps or be ruined far before them). Settlement caps (as they exist in the USA) are corporatism definitionally.

        1. Settlement caps (in general like we have) create an adverse system where parties can cause others’ economic loss and be shielded from making them whole.

          I am aware of no settlement caps that apply to economic damages. As far as I know, they apply solely to non-economic damages.

        2. Let’s not overlook that the plaintiffs bar itself is a massively powerful political operation.

          So, if there are rent-seekers on the pro-damages cap side, there are rent-seekers on the anti-damages cap side, as well.

          And yes, I am intimately familiar with the Texas tort reform laws. They impose caps solely on non-economic damages.

    3. The “theory” you’ve described is incoherent and asinine. The entire purpose of a civil tort system is to make plaintiffs whole — i.e., to compensate them for damages resulting from defendants’ conduct. If society is not already indifferent as between (a) a defendant avoiding causing harm in the first place and (b) a defendant causing harm but later making the plaintiff whole, then society has its head up its fucking ass, and its incandescent stupidity should not be accommodated or encouraged by permitting it to express moral outrage over defendants’ conduct in the form of punitive damage awards.

      1. Maybe I did a poor job explaining the theory, but it is far from asinine, especially when measured against your incoherent response.

        The entire purpose of a tort system is not just to make a plaintiff whole, and it never has been. If it were then it would be in everyone’s best interest to benefit themselves economically at others’ expense, because what the heck, at worst they’d have to make the other person whole. Tort has always had a component of deterrence (just like criminal law).

        You should read up on some of the economic theory behind legal systems, this is a good place to start: http://www.jstor.org/discover/…..3996919031

    4. McDonald’s shouldn’t have had to pay one cent in that case. 180 degrees Fahrenheit is not “unreasonably hot,” but is instead the temperature you expect coffee to be at if it’s been brewed properly. (See http://www.starbucks.com/coffe…..damentals: “Heat the water to almost boiling at 195? to 205?F in order to extract the coffee’s full range of flavors.”)

  14. Are we sure the jury didn’t just accidentally put a few extra zeros on the end of the number?

    Seems to me that $24 MILLION would be a reasonable settlement.

    $24 BILLION would make the women the richest person in the world.

    1. You know, I should know the answer to this, but are punitive damage awards taxed as income?

      1. Punitive damages are taxable and should be reported as “Other Income” on line 21
        of Form 1040, even if the punitive damages were received in a settlement for personal physical injuries or physical sickness.

        Some settlement recipients may need to make estimated tax payments if they expect their tax to be $1,000 or more after subtracting credits & withholding. Information on estimated taxes can be found in IRS Publication 505, Tax Withholding and Estimated Tax, and in Form 1040-ES, Estimated Tax for Individuals.

        So, she’ll have to pay taxes and will be punished for not paying the estimated tax. There is at least on group that can always have its cake and eat it, too.

        1. Ah. Cui bono? is always a useful question to ask. Since the government gets a chunk of cash, then why not have big verdicts?

  15. So, when can current smokers who haven’t died yet start cashing in on this? Seems silly that we have to wait until we die of some unpleasant disease.

  16. My grandfather was born in the late 1800’s, used to farm using horses.
    There were no surgeon general warning, no lung cancer studies. but he never smoked because, as he said, it just can’t be good for you.

  17. Punitive damages may conceptually be oxymoronic, but criminal law conceptually is totally nuts. Take for instance that person who served almost all of a prison sentence for murder & was then found not to have done it; why isn’t that person now entitled to commit 1 free murder? Why are attempts at crimes criminal in themselves? Why do damages get apportioned over a bunch of people in a tort case, but guilt isn’t similarly divided in crimes, where it seems to multiply instead to cover equally all the participants? Why does only the sovereign get to prosecute crimes, and how can it be “the people” vs. someone, when that someone & the jurors are people too?

  18. Can we begin by admitting no one’s life is worth the entire GDP of Estonia? I think this is mostly people not being clear about millions, billions and trillions, thanks to our awesome public school system. And by ‘awesome’ I mean ‘inspiring an overwhelming feeling of fear.’

  19. If the tobacco companies lied and misled people into taking lethal actions, then they should pay the appropriate penalty. If the people who made the decisions can’t be put in jail for the rest of their lives, then at least the company can receive the death penalty.

    I have NO sympathy for defendants who took up smoking AFTER the tobacco companies were compelled to admit that their products were potentially lethal. But for any who began smoking BEFORE the cigarette companies came clean – the sky should be the limit. So long as they were lying and disputing the evidence, there was only the possibility that cigarettes might be dangerous. Once they admitted the truth, there was the certainty that cigarettes could kill you.

    Sullum’s argument seems to be that “The cigarette companies lied – but we didn’t REALLY believe them, did we?” whereas the proper argument is, “The cigarette companies lied – and deserve to die because their lies killed people.”

    By the same logic, no one should be able to sue a scammer. The ever-present defense would be, “You’ve been warned about this scam” and “You didn’t REALLY believe us, did you?” To which the answer is, “It doesn’t matter – because your LIES just cost you $23 billion”.

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