(© 2005 by Tomasz Sienicki via Wikimeida Commons)

Big Tobacco has been whittling away jury awards to dying smokers and their survivors by wielding Florida’s offer of judgment law.

Erskin Donal Ward won $1.7 million in punitive damages against R.J. Reynolds, plus $487,000 against Reynolds and the Liggett Group, on behalf of his late wife Mattie Emma Ward. The trial judge also awarded him $1.45 million for fees and costs to be paid by the cigarette companies.

R.J. REYNOLDS TOBACCO AND LIGGETT GROUP, APPELLANTS, V. ERSKIN DONAL WARD, APPELLEE

Case no.: 1D13-0869

Date: June 24, 2014

Case type: Offer of judgment, wrongful death

Court: First District Court of Appeal

Author of opinion: Judge Robert T. Benton II

Lawyers for petitioners: Charles F. Beall Jr. and Larry Hill, Moore, Hill & Westmoreland, Pensacola; Gregory G. Katsas, Washington, and Stephanie E. Parker, John F. Yarber and John M. Walker, Atlanta, Jones Day; Randal S. Baringer, Womble, Carlyle, Sandridge & Rice, Winston-Salem, N.C.; Karen H. Curtis, Clarke Silverglate, Miami, and Kelly A. Luther and Kelly A. Spear, Kasowitz, Benson, Torres & Friedman, Miami

Lawyer for respondent: David J. Sales, David J. Sales P.A., Jupiter

Panel: Judges Benton, Philip J. Padovano and L. Clayton Roberts

Originating court: Escambia Circuit Court

After a June 24 ruling of the First District Court of Appeal, however, Ward lost his entitlement to fees and costs because he made a flawed settlement offer. Consequently he came out only about $750,000 ahead of the parties he defeated at trial.

The offer of judgment law, Florida Statutes Section 768.79, is intended to encourage settlement and penalize those who reject reasonable deals. As interpreted by some courts, it penalizes lawyers who rate an A- instead of an A in Draftsmanship 101.

In the Ward case, the plaintiff failed to attach a number—$0 for example—to his pre-trial proposal to shelve all claims including punitive damages if Reynolds paid him $216,000 and Liggett paid him $40,000. They rejected the offers and went to trial.

The statute shifts liability for fees and costs from a plaintiff to a defendant when a jury awards at least 25 percent more than the plaintiff’s offer. The shifting goes the other way when a jury awards no damages or an amount 75 percent or less than a defendant’s offer.

The related Florida Rule of Civil Procedure 1.442 requires the settlement proposal to “state with particularity the amount proposed to settle a claim for punitive damages, if any.”

Form Over Substance

“There is no ambiguity in Mr. Ward’s offers of judgment—it is clear the punitive damages claims would have been extinguished if the tobacco companies had accepted the offers—but the Supreme Court has made the test strict compliance, not the absence of ambiguity,” Judge Robert Benton wrote for the First District panel majority.

In dissent, Judge L. Clayton Roberts suggested he would rule the other way unless there is “a case expressly mandating the majority’s result.”

“Defendants were unable to articulate how they were harmed by plaintiff’s failure to assign an arbitrary numerical value such as zero or one dollar to the amount offered to settle the punitive damages claim,” he stated.

Douglas Eaton, who handles appeals for tobacco plaintiffs, read the ruling and seconded Roberts’ dissent.

“All of these cases are placing form over substance,” said Eaton, with Eaton and Wolk in Miami.

The tactic of exploiting that preference isn’t unique to Big Tobacco defense lawyers, they’re just very good at it, he said. “Tobacco will find any hypertechnical flaw in the offer of judgment to try to escape paying attorney fees.”

He described a drafting technique that should help plaintiffs lawyers avoid falling into the trap set by the First District ruling. It’s too late for the Ward case, where the jury verdict dates to January 2012.

Recently Eaton and his colleagues wrote up a model settlement proposal that tracks the language of the statute. The sum offered to settle punitive damages is $0.

“That’s an amount and it’s pretty hard to argue that you’re in noncompliance with the statute at that point,” he said.

Faith And Fees

The tobacco plaintiffs’ bar has another weapon in its offer of judgment arsenal: bad faith.

In cases where defendants offer nominal or token sums to settle, the judge has the discretion to determine the offer wasn’t made in good faith and deny fees and costs.

Two months ago the U.S. Court of Appeals for the Eleventh Circuit affirmed such a ruling in a tobacco case, Pickett v. R.J. Reynolds. In an unsigned opinion published May 6, the court held that U.S. District Judge Roy B. Dalton Jr. of Jacksonville did not abuse his discretion when he decided Reynolds, which won at trial, wasn’t entitled to almost $42,000 in attorney fees.

The judge correctly considered the low amount of Reynolds’ $10,000 offer, the eve-of-trial timing, a high potential for punitive damages and other factors including “the protracted, rancorous history of this litigation,” the Eleventh Circuit stated.

The fees were relatively insignificant, but the point was made.

“Those kinds of offers should only be held to be in good faith if the evidence at trial is just so weak that a defense verdict was almost pre-ordained,” Eaton said.

Ward, whose wife, Mattie, died of pulmonary disease at 68 after smoking for 55 years, still has a shot at fees and costs. The First District directed the trial court to consider his alternative motion “based on defendants’ unwarranted denials of requests for admission.”

In other words, bad faith.

Yet the court’s hair-splitting precedent stands for future cases and many more are coming.

The Engle class action verdict of 2000 launched a potential 8,000 lawsuits. In 2011, Courtroom View Network Engle Progeny Tracker said if 5,000 lawsuits went to trial and verdicts continued at a rate of 1.6 per month, the litigation would last more than 250 years.

Eaton said the tobacco plaintiffs’ bar tries to outfox defense lawyers as they probe for any drafting or other weakness they can leverage on appeal.

“Until the next flaw is found,” he said, “the battle continues.”