Philip Morris sees decline in health lawsuits

She started smoking Marlboro cigarettes in 1955, the year Philip Morris relaunched the brand. Forty-five years later, Betty Bullock had a two-pack-a-day habit and a diagnosis of terminal lung cancer.

Bullock was among the roughly four in 10 smokers who succeeded in getting a case against Henrico County-based Philip Morris USA into court and winning. Most lose on appeal, but Bullock's case still has legs, though not as the $28 billion case it once was.

Six years after her victory, and five after she succumbed to cancer, a U.S. Supreme Court ruling in another Philip Morris case is sending the question of how much to punish the company back to a Los Angeles courtroom.

Not so long ago, it seemed as if the future of the tobacco industry and the tens of thousands it employs in Virginia and across the South could be decided by a multibillion-dollar verdict in any one of a score of court cases.

Now, it's not so clear.

"We continued to see a decline in the number of traditional smoking and health cases in 2008," said Murray Garnick, a senior vice president and associate general counsel at Altria Group, the Henrico County-based company that owns Philip Morris USA. "In fact, last year no [health-related] tobacco case was tried to verdict against any U.S. cigarette manufacturer."

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The number of pending individual health-related cases has declined almost in half, from 183 in 2007 to 96 as of May 1, according to a Philip Morris filing. The number of pending class-action cases has declined from 11 to seven over the same period.

Bullock's case may set the stage to make it easier for tobacco companies to fend off big-dollar damage awards. In 2002, the Newport Beach, Calif., woman won what was then the largest award ever against Big Tobacco -- $28 billion. The trial judge slashed it to $28 million.

But now her family's case will be one of the first major tests of a recent U.S. Supreme Court ruling that judges can't punish companies for harm to people who aren't parties to a lawsuit -- a decision in yet another smoker's suit against Philip Morris USA.

Narrowing the base for calculating punitive damages should mean smaller awards -- though the Oregon court that prompted the Supreme Court ruling has reinstated the same damages Philip Morris appealed.

In the weeks ahead, in courtrooms in Florida's state system, another element of tobacco's changing legal picture will play out, too. At some point in about a dozen cases scheduled to come to trial this year, a judge will recite eight points as facts beyond a jury's power to decide -- points that cigarette-company lawyers used to argue hard, and often win.

A Florida Supreme Court ruling overturning a $145 billion award in the 2006 Engle class-action verdict requires judges to tell juries in some individual smokers' cases about eight things -- ranging from the negligence of cigarette companies to diseases that cigarettes cause, to a finding that cigarettes are defective, dangerous products -- that juries can't decide.

That leaves three points for the jury to consider: Was a particular smoker addicted? Did he or she die from a disease caused by cigarettes? Did the smoker share any blame for his or her habit?

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There are roughly 9,000 smokers, or smokers' families, with Engle-case claims affected by the Florida Supreme Court ruling, but a federal court responsible for about 3,900 of the plaintiffs has since said it is unconstitutional for federal judges to dictate the eight findings.

Of the three Engle cases to be individually tried, a jury awarded one smoker's family $8 million. Philip Morris is appealing. Juries in two other cases rejected smokers' claims.

It takes years for tobacco cases to work their way through the system -- Philip Morris will fight cases all the way to the U.S. Supreme Court, which is one reason why its annual legal bill ranged between $179 million and $200 million over the past three years.

The company wins a lot in appeals court.

One measure is that as Philip Morris exhausts its appeals, the amount of bond it had to keep posted with the courts has dropped 60 percent over the past five years, a Richmond Times-Dispatch review of its parent company's financial filings with the U.S. Securities and Exchange Commission shows.

The amount Philip Morris paid in judgments last year amounted to about $1.1 million, down from about $3.3 million in 2007, $37.7 million in 2006 and $13.3 million in 2005, those filings show.

Even before cases reach that stage, Philip Morris continues to win roughly 60 percent of cases that go to trial, the filings show.

And over the past five years, roughly two-thirds of cases filed have been dismissed or withdrawn before going to trial. Philip Morris, however, does not arrange out-of-court settlements to avoid going before a judge.

"Things may seem slower, but these are still good cases, and I think we're going to see more," said Richard A. Daynard, a law professor at Northeastern University in Boston and a prominent public-health advocate.

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The number of cases now pending from individual smokers or their heirs over damages to their health from smoking is about a third what it was five years ago -- not counting the cases in Florida state court that have the potential for thousands of verdicts.

The one kind of case that is growing alleges Philip Morris defrauded smokers by selling "low-tar" and "lights" cigarettes, fooling them into thinking they got something they weren't. These cases aren't seeking damages for harm to health; instead, they're alleging misrepresentation that caused smokers to pay too much for their cigarettes.

The number of these so-called "lights" cases, which has jumped from 17 at the end of last year to 27 as of May -- is still less than a third of the cases alleging damages to health. Courts have rejected many of the cases, and none has reached a final disposition in favor of the plaintiffs.

Philip Morris argues the cases don't make sense, since a claim for economic damages -- basically paying too much -- doesn't make sense if the prices of "lights" and other cigarettes were the same.

"Many of the plaintiffs who have brought these suits have continued to smoke Marlboro Lights despite their claims that they may not be getting lowered tar or nicotine," said Garnick, the Altria vice president.

Northeastern's Daynard, though, thinks there will be more of these cases after a December 2008 U.S. Supreme Court decision found that federal law didn't bar a smoker in Maine from making the claim, as Philip Morris had argued.

"They showed how it can be done," Daynard said. "These are health frauds, because people thought they were buying something different."

Contact David Ress at (804) 649-6051 or dress @timesdispatch.com.