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Arguing against the largest damage award in American history, attorneys for the tobacco industry said Wednesday that a $145 billion verdict should be overturned because the trial plan was unconstitutional and the plaintiffs’ attorney used unfair tactics to incite the jury. Appearing before a three-member panel in Florida’s 3rd District Court of Appeal, Elliot Scherker of Greenberg Traurig in Miami said the trial court’s strategy for handling the class action lawsuit amounted to an “Alice in Wonderland” version of justice. Scherker said Miami-Dade Circuit Judge Robert Kaye violated the companies’ right to due process by allowing the jury to award $145 billion in punitive damages before the majority of the class members received trials on their individual claims. “Why do you think your due process was violated?” asked Judge David Gerstein, the most aggressive interrogator on the panel during the 2 1/2�hour proceeding. “We are being punished for conduct to 700,000 people when we have only been held liable for three individuals,” Scherker replied before a packed courtroom. “Due process entitles us to be found guilty before we are punished.” Scherker also argued that lead plaintiffs’ attorney Stanley Rosenblatt of Miami made improper civil rights references to a predominantly black jury to turn them against the tobacco companies. During the trial, Rosenblatt purposely noted that Nat King Cole and Sammy Davis Jr. had died of lung cancer and made wild references to Martin Luther King Jr. and Rosa Parks, Scherker said. “He tied that shameful part of our history to the tobacco companies and essentially said, ‘How can you let them get away with it?’” Scherker said. “He made them civil rights heroes.” Rosenblatt countered that he was only responding to repeated assertions by the tobacco companies that they could not be held liable for nicotine addition and disease because cigarettes were legal. “My philosophical point to the jury was that just because it’s legal doesn’t make it right,” Rosenblatt said. “When the bus driver told Rosa Parks to give up her seat to a white man and move to the back of the bus, that was the law.” The appeal arises from a 1994 class action suit brought by Florida pediatrician Howard Engle and five other lead plaintiffs on behalf of a nationwide group of smokers. The six alleged that they were unable to stop smoking because they were addicted to nicotine and, as a result, developed medical problems ranging from cancer and heart disease to colds and sore throats. They sued on the theories of strict liability, negligence, breach of express warranty, fraud, conspiracy to commit fraud and intentional infliction of emotional distress. In 1996, the 3rd District Court of Appeal reduced the class to just Florida smokers, a group estimated to include as many as 700,000 people. In February 1998, Judge Kaye issued a trial plan, which was later modified. Under the plan, the case went to trial in several phases. Phase I was a yearlong trial of asserted common issues relating to the defendants’ conduct and the general health effects of smoking. It ended in July 1999, and a jury found the tobacco industry liable for lying to the public about the addictive nature of nicotine and the harmful effects of smoking, thus permitting a potential award of punitive damages. Phase II was divided into two subparts. In Phase II-A, which lasted five months, the jury heard evidence relating to three individual members of the class. The jury found that the tobacco industry deception determined in Phase I caused serious injury to the three people and awarded a total of $12.7 million in compensatory damages. Three months later, in April 2000, the jury in Phase II-B socked the tobacco industry with an unprecedented $145 billion punitive damages verdict, awarded to the entire class without allocation to any class member. Phase III hasn’t started yet — except for one case that was allowed to go forward because the plaintiff was dying of cancer and in which he won a $37.5 million judgment in June. Phase III provides that each of the hundreds of thousands of plaintiffs must try their cases individually before new juries to determine whether the defendants are liable for compensatory damages. Then, after such proceedings have been completed for all class members, the trial court will equally divide the $145 billion lump-sum punitive award among all class members who have succeeded in establishing their liability and compensatory damages claims. Last November, the cigarette makers, led by Philip Morris and three other companies, appealed to the 3rd District Court of Appeal. Defense attorneys are challenging Kaye’s November 2000 order — characterized as a final judgment. Kaye’s order directed the defendants to immediately pay the three individual plaintiffs $12.7 million in compensatory damages and to deposit $145 billion into the court registry for the benefit of the entire class, and retained jurisdiction to conduct the necessary further proceedings. The defendants posted a $100 million bond in order to go forward with their appeal. The appellants — which include Liggett Group Inc., Brooke Group Ltd., the Council for Tobacco Research-USA, the Tobacco Institute, Lorillard Inc., Brown & Williamson Tobacco Corp., American Tobacco Co. and R.J. Reynolds Co. — are asking the 3rd District Court of Appeal to reverse the entire judgment and decertify the class. Scherker argued that the verdict was illegal under Florida law because it would bankrupt the tobacco companies. He also said the trial plan flew in the face of Florida case law that said liability and compensatory damages must be decided before determining punitive awards. It also violated the 3rd District Court of Appeal’s own 1996 order certifying the case as a class action suit but requiring that the issue of damages be tried separately for each plaintiff, Scherker said. “There is no paintbrush broad enough to cover up the errors of this trial court,” Scherker said. Rosenblatt countered that big tobacco had presented no financial experts besides their CEOs to attest to what their companies were worth, leaving the jury with only testimony from the plaintiffs’ experts. “These CEOs had zero credibility with the jury,” said Rosenblatt, stopping to glance at notes his wife and co-counsel, Susan, passed throughout his argument. “They were the same guys who lied in Phase I that there was no causation and that nicotine was not addictive.” “But how do you justify $145 billion?” Judge Gerstein asked. “We had superb experts and they didn’t call a single one,” Rosenblatt said. “If that was their trial strategy, why should this court save them?” Arguing separately for defendants Liggett Group Inc. and its holding company, Brooke Group Limited, Alvin Davis of Steel Hector & Davis challenged punitive damages that had been levied against his clients. It made no sense to hit his client with millions of dollars in punitive damages when none of the three plaintiffs from Phase II had smoked Liggett cigarettes, Davis said. In fact, Davis noted, the jury had found zero liability in those cases. “Even though this was a highly emotionally charged case, it’s still essential that these three plaintiffs show injury by these two defendants,” Davis said. “This indicates how these companies just got swept along.” Rosenblatt said at least one of the defendants mentioned seeing Liggett advertisements that encouraged him to smoke, even though he chose a different brand. “They were part of the conspiracy by their own CEOs’ admission,” Rosenblatt said, adding that other class members testified in deposition that they had smoked Liggett products. Judge David Levy then questioned Rosenblatt about the ramifications of the financial arrangements in Kaye’s order, which requires the tobacco companies to deposit the total jury award immediately. “If the order is affirmed and the day of reckoning comes, they’d have to write a check for $145 billion,” Levy said. “What do we do with one of your own experts who said they can’t pay it today?” Rosenblatt replied that the plaintiffs would be willing to negotiate a payment plan.

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