For the tobacco industry, the stakes are enormous. It faces what could be the largest lawsuit in the nation’s history unless it persuades a federal appeals court to dissolve a massive class-action suit accusing it of intentionally keeping smokers addicted to cigarettes.
But there’s a lot more to the case than its impact on Big Tobacco.
Business groups say they fear that the unpopularity of the tobacco industry could contribute to a ruling that would set a bad precedent for other businesses.
A decision in the smokers’ favor, they say, could encourage the proliferation of big class actions against other industries and open them to “potential economic disaster.”
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“This sets a precedent,” said Jan Amundson, general counsel for the National Association of Manufacturers. “I don’t know what the next (class action) is. Maybe it would be a pharmaceutical company, maybe it would be a product manufacturer.”
Class-action lawsuits, which allow people to sue on behalf of other people with similar grievances, can be a useful and efficient way to get issues resolved against a company.
Sometimes, they’re the only way for people to exercise their rights, because the amount of money involved may be too small for a person to pursue the case on his own.
But critics have said the class action often is abused. In recent weeks, this column has pointed out lawyers who got more money from the lawsuits than their clients did.
Other critics say that unless carefully controlled, class actions can become too time-consuming and expensive. And, even if businesses could afford defending such large lawsuits, they couldn’t afford the risk of a verdict against them. The suits, they say, all but force companies to settle.
That’s how many in the business community see the tobacco litigation. As a result, several trade groups have filed briefs in support of the industry’s request to decertify the class action.
“If the issue was, `Is tobacco right or wrong?’ we wouldn’t be there,” said Stephen Bokat, general counsel of the National Chamber Litigation Center, which is affiliated with the U.S. Chamber of Commerce.
“It’s not so much that anyone has tremendous sympathy for tobacco companies, but rather that you end up in a situation where a defendant for whom there’s little sympathy ends up creating a nightmare, for which there’s precedent for the rest of the business community.”
And that’s bad for business, they say.
“The threat of such litigation will undermine the free enterprise system and precipitate economic disruption, including layoffs and potential bankruptcy, to relieve the effects of financially onerous and unjust class settlement,” the National Association of Manufacturers and the Chamber of Commerce argued in a brief opposing the class action.
Lawyers for the tobacco companies asked a three-judge federal appeals court panel Tuesday to reverse a lower court ruling that certified the massive class-action suit against them.
Counsel for the plaintiffs argues that it’s a more economical and efficient way to resolve the issue of whether the companies manipulated nicotine levels and concealed it. Individual lawsuits across the country would take longer and be more of a burden on the justice system.
“If the class certification is overturned, that’s hardly devastating to the plaintiffs, because that would mean the dozens of plaintiffs’ firms who have brought the suit would file numerous cases around the country,” said Clifford Douglas, an anti-tobacco activist. “That probably would be far more onerous for the American judicial system and, possibly, more onerous for the tobacco industry itself.”
But the tobacco companies, and other business interests, say the federal judge who approved the smokers’ class action went too far because many of the considerations for certifying a class action were missing in the case.
For example, they noted that there’s no backlog of cases nationwide that would merit combining all the complaints. And the tobacco companies haven’t lost case after case in earlier trials like the asbestos companies did before they were hit with class actions. (In fact, the tobacco industry has never lost.)
What’s more, the smokers are in different situations–they started smoking at different times and for different reasons.
“The tobacco companies don’t have the greatest publicity, but we don’t believe in lynchings in this country,” said Martin Redish, a professor at Northwestern University Law School. “This amounts to a civil equivalent of lynching.”