NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING
MOTION AND, IF FILED, DETERMINED
IN THE DISTRICT COURT OF APPEAL
OF FLORIDA
SECOND DISTRICT
PHILIP MORRIS USA, INC., and R.J. )
REYNOLDS TOBACCO COMPANY, )
)
Appellant, )
)
v. ) Case No. 2D14-5403
)
JAMES HARRIS LOURIE, as Personal )
Representative of the Estate of )
Barbara Ruth Lourie, deceased, )
)
Appellee. )
___________________________________ )
Opinion filed August 10, 2016.
Appeal from the Circuit Court for
Hillsborough County; William P. Levens,
Judge.
Razvan Axente and Bonnie Daboll of
Shook, Hardy & Bacon, L.L.P., Tampa;
Geoffrey J. Michael of Arnold & Porter,
LLP, Washington, D.C.; Gregory G. Katsas
of Jones Day, Washington, D.C.; and
Charles R.A. Morse of Jones Day, New
York, New York, for Appellants.
David J. Sales of David J. Sales, P.A.,
Jupiter; Laurie Briggs of Searcy, Denney,
Scarola, Barnhart & Shipley, P.A., West
Palm Beach; Steven L. Brannock, Celene
Humphries, and Philip J. Padovano of
Brannock & Humphries, Tampa; and Brent
Bigger of Knopf/Bigger, Tampa, for
Appellee.
KHOUZAM, Judge.
In this Engle-progeny case,1 Philip Morris USA, Inc., and R.J. Reynolds
Tobacco Co. timely appeal the final judgment entered in favor of James Lourie, as
personal representative of the Estate of Barbara Ruth Lourie. The tobacco company
defendants argue that federal law implicitly preempts state law tort claims of strict
liability and negligence for the sale of cigarettes because federal law effectively prohibits
states from banning cigarette sales and the Engle Phase I findings amount to a ban on
selling cigarettes. We affirm because the implied preemption argument is not only
barred by res judicata but is also without merit.
I. RES JUDICATA
"[T]he Phase I verdict against the Engle defendants resolved all elements
of the claims that had anything to do with the Engle defendants' cigarettes or their
conduct." Philip Morris USA, Inc. v. Douglas, 110 So. 3d 419, 432 (Fla. 2013). The
Florida Supreme Court has made clear that these Phase I findings appropriately
established the tobacco company defendants' common liability and are entitled to res
judicata effect. Id. at 432-33 (citing Engle v. Liggett Grp., Inc., 945 So. 2d 1246, 1269
(Fla. 2006) (Engle III)). The companies are now "precluded from arguing in individual
actions that they did not engage in conduct sufficient to subject them to liability." Id.
This is because
res judicata prevents the same parties from relitigating the
same cause of action in a second lawsuit and "is conclusive
not only as to every matter which was offered and received
to sustain or defeat the claim, but as to every other matter
1
A concise history of Engle v. Liggett Group, Inc., 945 So. 2d 1246 (Fla.
2006) (Engle III), and its progeny can be found in Philip Morris USA, Inc. v. Douglas,
110 So. 3d 419, 422-25 (Fla. 2013).
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which might with propriety have been litigated and
determined in that action."
Id. at 432 (quoting Engle III, 945 So. 2d at 1259). In other words, the tobacco
companies cannot raise the implied preemption defense here even if they had not
raised it in Engle because it could have been raised in Engle. See id.
But the tobacco companies did in fact raise this argument in Engle. When
they appealed the final judgment in Engle to the Third District, they plainly challenged
the Engle trial court's rulings on the ground of implied preemption:
A. Plaintiffs' Attacks On The Sale of Cigarettes Were
Barred By A Series Of Federal Statutes
....
The court's rulings were erroneous. For more than 60
years, federal statutes have protected the right to sell
cigarettes, even while Congress recognized that
cigarettes were dangerous. Federal law thus preempts
claims that selling cigarettes is tortious or otherwise
improper. . . . In addition, because the sale of cigarettes
is subject to federal regulation, attempts to impose
contradictory requirements or prohibitions under state law
are subject to at least implied preemption.
Combined Initial Brief of All Appellants other than Liggett and Brooke at 132-34, Liggett
Group Inc. v. Engle, 853 So. 2d 434 (Fla. 3d DCA 2003) (Engle II) (No. 3D00-3400).
The Third District agreed with the tobacco company defendants' position, specifically
stating that "[b]ecause the sale of cigarettes is subject to federal regulation, attempts to
impose contradictory requirements or prohibitions under state law are subject to at least
implied preemption." Engle II, 853 So. 2d at 460 n.35. The Third District's decision was
approved in part and quashed in part by the Florida Supreme Court in Engle III, 945 So.
2d 1246. Though the supreme court only mentioned the defendants' "preemption
defense" in passing, see id. at 1273, it is clear that this defense was before the court.
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And the court necessarily rejected this argument in holding that certain Phase I findings
had res judicata effect. Id. at 1255, 1269 (stating that a majority of the court "concludes
that it was proper to allow the jury to make findings in Phase I on Questions 1 (general
causation), 2 (addiction of cigarettes), 3 (strict liability), 4(a) (fraud by concealment),
5(a) (civil-conspiracy-concealment), 6 (breach of implied warranty), 7 (breach of express
warranty), and 8 (negligence)," and further explaining that "the Phase I common core
findings we approved above will have res judicata effect in [individual damages] trials").
The United States Supreme Court denied certiorari, opting not to address the issue.
See R.J. Reynolds Tobacco Co. v. Engle, 552 U.S. 941 (2007). Accordingly, the claim
has been finally determined and cannot be raised again in Engle-progeny cases like this
one.
We also conclude that barring the tobacco company defendants from
raising this defense again does not violate the tobacco companies' due process rights.
The supreme court has explicitly rejected the argument that "accepting the Phase I
findings as res judicata violates [the tobacco company defendants'] due process rights."
Douglas, 110 So. 3d at 430. Due process requires that a party must be given notice
and an opportunity to be heard, and it is true that the principle of res judicata should not
be applied to deny a party those rights. Id. However, here the tobacco company
defendants not only had a full and fair opportunity to raise this defense but actually did
raise it in Engle. Though they may disagree with the resulting final determination, there
has been no violation of their due process rights.
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II. IMPLIED PREEMPTION
We also reject the tobacco company defendants' implied preemption
defense on its merits. As a threshold issue, we note that the tobacco companies relied
heavily on the Eleventh Circuit's decision in Graham v. R.J. Reynolds Tobacco Co., 782
F.3d 1261 (11th Cir. 2015), to support their implied preemption claim. But the Eleventh
Circuit has since vacated the panel opinion in Graham and granted rehearing en banc.
Graham v. R.J. Reynolds Tobacco Co., 811 F.3d 434 (11th Cir. 2016) (vacating the
panel opinion and granting rehearing en banc). So the Graham panel opinion no longer
has any precedential value. See Blank v. Bethlehem Steel Corp., 738 F. Supp. 1380,
1381 (M.D. Fla. 1990). The reasoning in the Graham panel opinion has also been
recently rejected in R.J. Reynolds Tobacco Co. v. Marotta, 182 So. 3d 829 (Fla. 4th
DCA 2016), review granted, No. SC16-218, 2016 WL 934971 (Fla. Mar. 8, 2016), and
Berger v. Philip Morris USA, Inc., 3:09-CV-14157, 2016 WL 2593841 (M.D. Fla. May 5,
2016). We agree with the sound reasoning set forth in Marotta and Berger.
The tobacco company defendants argue that federal law implicitly
preempts state law tort claims of strict liability and negligence for the sale of cigarettes
because federal law effectively prohibits states from banning cigarette sales and the
Engle Phase I findings amount to a ban on selling cigarettes. We disagree.
The United States Supreme Court has explained that "because the States
are independent sovereigns in our federal system, we have long presumed that
Congress does not cavalierly pre-empt state-law causes of action." Medtronic, Inc. v.
Lohr, 518 U.S. 470, 485 (1996). So "[i]n all pre-emption cases, and particularly in those
in which Congress has 'legislated . . . in a field which the States have traditionally
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occupied,' " such as the protection of public health and safety, the court must "start with
the assumption that the historic police powers of the States were not to be superseded
by the Federal Act unless that was the clear and manifest purpose of Congress." Id.
(quoting Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230 (1947)). Indeed,
congressional purpose is the ultimate touchstone in every preemption case. Id. (citing
Retail Clerks v. Schermerhorn, 375 U.S. 96, 103 (1963)). Implied preemption claims,
like the one advanced here, are particularly difficult to prove because there is no
express preemption provision to interpret and "a high threshold must be met if a state
law is to be preempted for conflicting with the purposes of a federal Act." Chamber of
Commerce of the U.S. v. Whiting, 563 U.S. 582, 607 (2011) (quoting Gade v. Nat'l Solid
Wastes Mgmt. Ass'n, 505 U.S. 88, 110 (1992)).
First, federal law does not prohibit states from banning cigarette sales.
"Although the federal government has chosen to regulate aspects of the cigarette
industry while stopping itself short of banning cigarettes, it did not intend to force the
states to accept that cigarettes must remain on their markets." Berger, 2016 WL
2593841, at *8. The tobacco companies refer to a number of federal statutes that they
claim effectively prohibit states from banning the sale of cigarettes. But this claim is
belied by the federal acts themselves. For example, the Federal Cigarette Labeling and
Advertising Act only prevents the states from imposing separate regulations on the
labeling and advertising of cigarettes. See 15 U.S.C. § 1334(b) (2014) ("No
requirement or prohibition based on smoking and health shall be imposed under State
law with respect to the advertising or promotion of any cigarettes the packages of which
are labeled in conformity with the provisions of this chapter."). Nothing in this Act
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indicates an intent to preempt states from banning cigarette sales altogether. Similarly,
the Family Smoking Prevention and Tobacco Control Act grants the U.S. Food and
Drug Administration (FDA) authority to regulate cigarettes and prohibits the FDA from
banning cigarettes. See 21 U.S.C. §§ 387a(a), 387g(d)(3) (2014). But it does not
prevent the states from banning cigarettes—indeed, it expressly preserves the states'
authority to "prohibit[] the sale . . . of tobacco products." 21 U.S.C. § 387p(a)(1). It also
specifically provides that "[n]o provision of this subchapter relating to a tobacco product
shall be construed to modify or otherwise affect any action or the liability of any person
under the product liability law of any State." 21 U.S.C. § 387p(b).
We also note that, just as "Congress knew about the addictive and
hazardous properties of cigarettes, it also surely knew about widespread tort litigation
dealing with tobacco's ravaging effects on health." Berger, 2016 WL 2593841, at *10
(citing Goodyear Atomic Corp. v. Miller, 486 U.S. 174, 184-85 (1988), for the proposition
that "[w]e generally presume that Congress is knowledgeable about existing law
pertinent to the legislation it enacts"). And "[y]et Congress has never manifested a
preemptive impulse toward state law remedies of which it presumably knew when it
acted." Id. Further, the tobacco companies' suggestion that state and local
governments cannot ban any product that Congress has regulated "cannot withstand
the test of experience and logic," Marotta, 182 So. 3d at 833, and "would represent a
breathtaking expansion of obstacle preemption that would threaten to contract greatly
the states' police powers," Berger, 2016 WL 2593841, at *10. The fact that "dry
counties" exist even though the federal government regulates alcohol exemplifies just
how sharply the companies' position contrasts with the current state of the law. See
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Marotta, 182 So. 3d at 833. Ultimately, we believe that even though Congress does
regulate certain aspects of the sale of cigarettes, "a state's power to regulate matters of
health and safety encompasses the power to regulate cigarettes, or even to ban their
sale entirely." Berger, 2016 WL 2593841, at *9.
Second, the Engle Phase I findings do not amount to a ban on selling
cigarettes. Cigarettes are sold throughout Florida, and many people still choose to
purchase and smoke them.
Had the Phase I verdict created a ban on cigarette
sales, those sales would have ended two decades ago.
Cigarette makers want to eat their cake and have it too.
Trying to erect a purported ban on cigarette sales to evade
liability, they continue to profit from their products, feeling, as
they do so, no real-world constraint or restriction from the
Phase I verdict. Res ipsa loquitor.
Berger, 2016 WL 2593841, at *8.
The argument that the Engle Phase I findings amount to a ban on the sale
of cigarettes hinges on the claim that the Phase I jury's findings were overly broad,
essentially determining that cigarettes are inherently defective and that cigarette
manufacturers are inherently negligent. The Graham panel opinion posited that the
Engle Phase I findings created a " 'brandless' cigarette, one produced by all defendants
and smoked by all plaintiffs at all times throughout the class period" and that this
"imposed a duty on all cigarette manufacturers that they breached every time they
placed a cigarette on the market." Graham, 782 F.3d at 1279-80. But the Florida
Supreme Court has already rejected the claim that the Engle Phase I findings are overly
broad:
Notwithstanding our holding in Engle, the defendants
attempt to avoid the binding effect of the Phase I findings by
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arguing that they are not specific enough to establish a
causal link between their conduct and damages to individual
plaintiffs who prove injuries caused by addiction to smoking
the Engle defendants' cigarettes. But, by accepting some of
the Phase I findings and rejecting others based on lack of
specificity, this Court in Engle necessarily decided that the
approved Phase I findings are specific enough. . . .
Accordingly, we reject the defendants' argument that
the Phase I findings are too general to establish any
elements of an Engle plaintiff's claims . . . .
Douglas, 110 So. 3d at 428-29.
Indeed, the Engle I findings were much more specific than the tobacco
company defendants and the Graham panel suggest. Not every tobacco company
selling cigarettes in Florida was a defendant in Engle, only smokers who had suffered
certain specific harms are part of the class, and the jury determined whether the
conduct at issue occurred during certain time periods. See Verdict Form for Phase I
(completed), Engle v. RJ Reynolds Tobacco Co., No. 94-08273 CA-22 (Fla. 11th Cir. Ct.
Nov. 6, 2000); see also Berger, 2016 WL 2593841, at *7-8. The companies were not
held liable for simply placing cigarettes on the market or the inherent characteristics of
cigarettes. Rather, based on evidence that the companies had manipulated the nicotine
levels in their cigarettes to make them more addictive and manufactured cigarettes with
filters that increased the cigarettes' inherently deleterious effects, the companies were
found liable for placing cigarettes on the market that were defective and unreasonably
dangerous. They were also found liable for failing to exercise a degree of care that a
reasonable cigarette manufacturer would exercise under like circumstances—a
standard that assumes cigarettes could be sold in a reasonable manner. Accordingly,
we reject the tobacco company defendants' "characterization of the Phase I liability
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findings as being based on nothing more than the inherent properties of cigarettes,"
Berger, 2016 WL 2593841, at *8, and with it the claim that the Engle Phase I findings
operate as a ban on the sale of cigarettes.
Affirmed.
BLACK and SALARIO, JJ., Concur.
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