Preclusive Effect of Engle Findings Against Tobacco Cases Does Not Violate Due Process

In a 7-3 decision, the Eleventh Circuit sitting en banc declined to overrule Walker v. R.J. Reynolds Tobacco Co., 734 F.3d 1278 (11th Cir. 2013), and held (again) that a jury’s negligence and strict liability findings in the Engle class action against tobacco companies may be given preclusive effect in follow-on individual cases without violating the Due Process Clause. Graham v. R. J. Reynolds Tobacco Co., 2017 WL 2176488 (11th Cir. May 18, 2017).  The court also held that the jury’s findings were not preempted by federal law.

The majority opinion, written by Judge William Pryor, began by reviewing the issues presented in the “Phase I” Engle trial in Florida state court.  The jury in that case heard evidence that all of the cigarettes manufactured by the various defendants contained carcinogens, and that nicotine is addictive.  The trial court instructed the jury about the plaintiffs’ strict liability and negligence claims without regard to specific brands of cigarettes, and the verdict form included a series of yes-or-no questions.  Among other things, the jury was asked whether smoking caused various diseases (to which the jury answered “yes” for 20 diseases); whether nicotine is addictive (“yes”); whether each tobacco company was strictly liable (“yes” for each defendant); and whether each tobacco company was negligent (“yes” for each defendant).  The jury also answered “yes” to the question whether the tobacco companies’ actions entitled the class to punitive damages.  On appeal, the Florida Supreme Court affirmed the Phase I class certification and said that the jury’s findings that the defendants acted negligently and sold defective products “will have res judicata effect” in follow-on individual actions. Engle v. Liggett Grp., Inc., 945 So. 2d 1246 (Fla. 2006).

Later, the Florida Supreme Court clarified that its statement about “res judicata” meant claim preclusion, not issue preclusion, and held that the jury findings from Phase I “conclusively established” common elements of class members’ claims, including that the tobacco companies manufactured defective products, that they were negligent, and general causation. All individual plaintiffs had left to prove was their membership in the class; legal causation in each of their individual cases; and damages. Philip Morris USA, Inc. v. Douglas, 110 So. 3d 419 (Fla. 2013).  In Walker v. R.J. Reynolds Tobacco Co., 734 F.3d 1278 (11th Cir. 2013), the Eleventh Circuit held that giving the findings preclusive effect did not violate the defendants’ due process rights, because even if due process requires that an issue be “actually decided” in the prior litigation, the relevant issues had been “actually decided” in Engle I, whatever terminology the Florida Supreme Court used in describing the preclusive effect.

Graham was one of the Engle follow-on cases, in which a jury awarded the plaintiff $825,000.  A panel of the Eleventh Circuit reversed, holding that the Engle findings were preempted by federal law.  The plaintiff’s petition for hearing en banc was granted, and the parties were allowed to brief both the preemption and due process issues.

The Eleventh Circuit confirmed its holding in Walker that there was no due process violation.   The court again assumed, without deciding, that due process requires that the relevant issue be “actually decided” in one case before it is given preclusive effect in another.  “Based on our review of the Engle proceedings, we are satisfied that the Engle jury actually decided common elements of the negligence and strict liability of [the defendants].”  In support of that conclusion, the court cited the defendants’ admissions that the Engle plaintiffs had presented common proof that nicotine is addictive and that cigarettes cause disease, in addition to brand-specific evidence.  Indeed, the court noted, the defendants’ closing arguments in Engle had framed the issue as whether “all cigarettes that contain nicotine” are addictive.  And the verdict form was “most naturally read,” the court found,  to convey findings as to all cigarettes, regardless of brand.  The court rejected the defendants’ argument that the use of the phrase “res judicata” in Douglas suggested that, at least as far as the Florida Supreme Court was concerned, the issues were not “actually decided” in Engle:  “[t]he Due Process Clause does not require a state to follow the federal common law of res judicata and collateral estoppel. . . . We recognize that the Engle Court defined a novel notion of res judicata, but we cannot say that the substance of that doctrine or its application in these trials was so unfair as to violate the constitutional guarantee of due process.”  As long as the parties have had notice and an opportunity to be heard, due process is satisfied.

The court also rejected the defendants’ argument that the Engle jury’s findings were preempted by federal law.  The six tobacco-specific federal laws in question, the court noted, all concerned labeling and warnings.  “Nothing in these six statutes reflects a federal objective to permit the sale or manufacture of cigarettes,” such that the Engle verdict would conflict with federal law.

In a lengthy dissent, Judge Tjoflat disagreed with the majority’s “false narrative of Engle III”—that is, the 2006 decision from the Florida Supreme Court—and with the conclusion that the defendants had been afforded an opportunity to be heard “on whether their unreasonably dangerous product defect(s) or negligent conduct caused Ms. Graham’s death.”  Judge Wilson also dissented, observing that “[t]he defendants have no doubt been provided notice and some degree of opportunity to be heard in court, but like Judge Tjoflat, I am not content that the use of the Engle jury’s highly generalized findings in other forums meets ‘the minimum procedural requirements of the . . . Due Process Clause in order to qualify for . . . full faith and credit.’”  Judge Julie Carnes joined the majority on the preemption issue but dissented as to the due process claim.  Chief Judge Ed Carnes recused himself and did not participate in the decision.

Posted by Valerie Sanders.

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