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Former smoker Patricia Henley’s suit against tobacco giant Philip Morris Inc. rings with allegations of conspiracies and deceit, but in the end the case might be decided on the more mundane issues of retroactivity and judgment ratios. The case, which went before California’s First District Court of Appeal on Tuesday, is the first in the state in which a smoker has won a judgment against a tobacco manufacturer. And what a judgment it was — $26.5 million, of which $25 million was in punitive damages. Philip Morris is claiming that not only was the punitive award “grossly excessive,” but that the trial court erred on several grounds, including ruling that a 1998 change in state law retroactively revoked the statutory immunity from liability that tobacco companies had enjoyed for 10 years. “If not reversed,” the company’s lawyers wrote in court papers, “the judgment here could provide a template for countless others to flood the California courts with claims against cigarette companies.” Henley filed Henley v. Philip Morris Inc., A086991, in 1998 after learning that she had contracted lung cancer. The now-55-year-old Los Angeles resident, a smoker since age 15, blamed Marlboro cigarettes, a Philip Morris brand, for her condition. Henley, whose cancer is currently in remission, accuses Philip Morris of conspiring for years to lure new smokers with ad campaigns indicating that cigarettes were not harmful. She also claims that despite the warnings of the U.S. surgeon general and others, she had no knowledge that cigarettes could cause cancer and other ailments when she took up smoking in the early ’60s. “The information environment in this country at the relevant time periods was one of ignorance,” Daniel Smith, Henley’s Kentfield, Calif.-based appellate lawyer, told the three justices hearing the case Tuesday. “She was directly influenced by the people around her,” he added later, “her doctor, her friends, her family, who themselves were influenced.” M. Laurence Popofsky, representing Philip Morris, responded by saying that while government officials might not have expressly mentioned cancer or emphysema in the early days, they definitely made it quite clear that cigarettes were “an inherently unsafe product. “In effect,” the Heller Ehrman White & McAuliffe partner said, “they put you on notice that if you smoke, you smoke at your own risk.” Popofsky also took San Francisco Superior Court Judge John Munter to task, saying he erred by instructing jurors on the issue of a conspiracy. In court papers, he had pointed to the federal Public Health Cigarette Smoking Act of 1969, which, he said, pre-empts states from requiring stricter warning labels than required by the surgeon general. “Philip Morris would have won, had the matter not been incorrectly instructed [by Munter],” he said. Despite all the conspiracy talk, however, Justices Timothy Reardon, Laurence Kay and Patricia Sepulveda seemed more intent on hearing arguments about whether the $25 million in punitive damages was excessive and whether Munter erred on his retroactivity finding. Specifically, Munter had said that 1998 amendments to the state’s Civil Code had revoked the statutory immunity from liability that the state Legislature had awarded tobacco companies in 1988 — thereby exposing manufacturers to retroactive liability. “This was legal error,” Popofsky wrote in court papers. “Almost every court to consider the issue has ruled that the 1998 amendments do not retroactively strip cigarette manufacturers of their prior statutory immunity from liability.” Popofsky also took issue with the $25 million in punitive damages, which he noted was a 17-1 ratio with the compensatory damages of $1.5 million. He pointed out that the U.S. Supreme Court has stated that a 4-1 ratio might be close to the line of “constitutional impropriety.” Punitive damages, he said, are supposed to punish in relation to the harm caused the individual plaintiff, “not the other 400,000 smokers in California and the millions of others outside of California.” However, Henley’s lawyer, Smith, argued that the large punitive damage award should be retained because of the harm Philip Morris has caused by allegedly luring young smokers — like Henley when she started — to a product they knew would make them ill. “They took the most susceptible group in our society,” he said. “And they got those children addicted to cigarettes, so by the time they made a mature judgment [about quitting], it was too late.” Smith also noted that jurors had originally awarded $50 million in damages, but that Munter had cut them in half, keeping them high enough, though, to make sure Philip Morris felt the pain. Philip Morris faces a very similar suit in Los Angeles. In a case brought by former smoker Richard Boeken, jurors in June awarded $5.5 million in compensatory damages and $3 billion in punitive damages. The trial judge this month reduced the punitive award to $100 million, but Philip Morris has appealed, calling the amount — still an 18-1 ratio — outrageous. In that case, Boeken, like Henley, claims to have been unaware of the health risks of smoking. Philip Morris officials have called that “simply not believable.” Henley defended her claim — and by extension Boeken’s — after Tuesday’s hearing in San Francisco. “If I knew [there were risks], then there would be something wrong with my brain if I kept using a product that would kill me,” she said, adding that her suit wasn’t about the money. “This is about saving the next generation of children,” she said, “and exposing these [cigarette manufacturers] for the murderers they are.” Popofsky wouldn’t predict how the First District would come down on the case, but he and Smith noted that the California Supreme Court currently has cases before it dealing with the retroactivity of the Civil Code debated Tuesday. Smith said that the questions asked by the justices “were favorable to our side.”

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