JIM LEHRER: The tobacco industry engaged in extreme and outrageous conduct. That's what a Florida jury decided yesterday in step one of the first tobacco class-action lawsuit ever to come to trial. Here to walk us through the finding and its potential impact are Mary Aronson, head of a tobacco policy and litigation research firm in Washington; Martin Feldman, a tobacco analyst with the Wall Street firm, Salomon Smith Barney; and we hoped to be joined in a few moments by Clark Freshman, a law professor at the University of Miami. Ms. Aronson, what exactly did the jury find?
MARY ARONSON: Well, in this first phase of a three-part trial, the jury was looking exclusively at the issue of general causation, whether or not, in the abstract, tobacco can cause the variety of diseases that are being claimed by members of the class in the named plaintiffs. The jury pretty much found across the board that, indeed, I think 20 out of 20 diseases claimed could be caused by tobacco. The second thing was whether or not the behavior of the tobacco industry was egregious enough that the industry should be forced to pay punitive damages down the road and again, on that point, they also voted with the plaintiff.
JIM LEHRER: And the egregious conduct that they found that the tobacco engaged in was what exactly?
MARY ARONSON: Well, things like withholding information from the public about the dangers of smoking, about the possibility of addiction, on the one hand, and on the other hand, promising the public that they would be forthcoming, the promise was made back, you know, 20, 30 years ago. They did not keep up with that promise, and they were found to be responsible.
JIM LEHRER: Now, in this first phase, what kind of witnesses were put before the jury by both sides?
MARY ARONSON: Well, there was a variety. I think there was 80-some witnesses; when I was observing the case the first week, they started out, for example, with a former surgeon general. There are all sorts of expert witnesses that normally come before the court about whether or not various diseases can, indeed, be caused by smoking. You know, there are a variety of types of witnesses. One thing that they did not put before the jury in this first phase were the individual claimants. Their concerns, their damage claims will come up in the second phase.
JIM LEHRER: And that's the one that -- it could begin on Monday, right?
MARY ARONSON: Yes. Well, I think the judge is supposed to make some sort of a decision on that.
JIM LEHRER: Right. He's going to decide on Monday as to when.
MARY ARONSON: I mean, the same jury is sitting and waiting. They've been in court with this case since October when it began, and as I understand were not aware until, you know, the end of the first phase that they were going to have to sit for the second phase. I'm sure they're anxious to have it move ahead.
JIM LEHRER: Now, just staying with the first phase for a moment, Mr. Feldman, was what the jury found a stunning thing from the industry's point of view?
MARTIN FELDMAN: Well, it was the very first time that you've had a tobacco class action reach a jury verdict. And of course, it was a very, very tough verdict for the tobacco industry. I think it's important to recognize, however, that a very large number of both state and federal courts have said tobacco classes don't work and have largely decertified them. So while this decision was very tough for the industry and I think came about largely as a result of the expert use of internal industry documents made public through the various settlements over the last 18 months, there's a very real chance that this case might be decertified and disappear within the course of the next six to nine months.
JIM LEHRER: We'll get to that in a moment. Just the finding of the jury, what the jury found that the tobacco industry did and what tobacco causes as a matter of health risk, was that something new? Had any jury and any court ever found that before?
MARTIN FELDMAN: That was entirely new. You had never had a jury actually say cigarette smoking is addictive. It causes a very large number of diseases, and the industry indulged in a large degree of misconduct over a 30-year period.
JIM LEHRER: Okay. Now, let's go to the second phase. The second phase will now determine what damages will be paid. Now, there are nine defendants, I mean, nine plaintiffs in this case, right?
MARTIN FELDMAN: Nine lead plaintiffs, correct.
JIM LEHRER: Lead plaintiffs. And the jury will now be called back to listen to what?
MARTIN FELDMAN: In the first phase, we heard the common elements of the claim. Now we're going to hear the individual aspects surrounding each smoker, each individual plaintiff. The tobacco industry will try and prove that each of these smokers knew the risks of smoking before, in fact, they ever started. They weren't allowed to introduce any evidence like that in phase one. And I think they'll be hoping, they'll obviously be hoping that the jury decides as many juries have done to date, that because the smokers knew of the risks, they're not liable to pay damages.
JIM LEHRER: And, on the other hand, Ms. Aronson, the plaintiff's lawyers will be trying to present what?
MARY ARONSON: Well, they're probably going to say that you can't have a fully informed smoker who can assume the risk unless all of the information is out there, unless the industry or whoever the maker is of whatever product is at issue in a case has been forthcoming with information and because of the concealment and because of the misrepresentation, that was found in these various document, smokers weren't informed. And therefore, they didn't assume the risk.
JIM LEHRER: So as a practical matter, phase two will resolve this for these nine plaintiff, right?
MARY ARONSON: Yes. Marty was very correct in what he said earlier. You know, class-actions are supposed to be efficient means of resolving a lot of similar claims with - you know -- many of the same defendants. There are a lot of common issues such as in the big picture, does smoking cause these diseases? In the big picture, was the industry's behavior so horrible that punitive damages should be awarded? But in the second phase, what they'll be looking at is each of the smoker's specific ailments and whether that ailment which is first phase said in the general sense can be caused by smoking, whether for a particular named plaintiff, his cancer or heart disease was caused by smoking.
JIM LEHRER: That has to be proved to the jury that -
MARY ARONSON: Right.
JIM LEHRER: -- this particular person started smoking on a certain date and caught a certain disease, et cetera.
MARY ARONSON: Right. You see, the problem with tobacco and asbestos and some of these diseases that are caused by products and result in long latency periods is that over the course of that latency period, over the 20 or 30 years, an individual is exposed to a number of other potential environmental toxins that might have also caused his or her disease. So the industry is probably going to look very closely at these claimants to see whether or not if someone had lung cancer, for example, whether or not it was indeed, due to smoking or perhaps radon in his basement or exposure to Agent Orange or whatever.
JIM LEHRER: And, Mr. Feldman, as you said also, the key to it, though, will be that the companies will say hey, look, it's right there on the pack that it could make you sick, so if you read that on the pack and you did it anyhow, it's your problem, not the industry's problem. Is that in a nutshell what they're going to argue?
MARTIN FELDMAN: Well, I think they'll go back to the beginning of the century and they'll show "Reader's Digest" and Life Magazine's and songs about tobacco and say that it was part of society's knowledge that everyone has known the dangers of cigarettes and it's difficult information to rebut. So I think that will be the main argument they'll bring. But the other point on the decertification-- Mary commented that the use of a class action is to try to efficiently use the judicial system. In phase three of this trial, Stanley Rosenblatt, the plaintiff lawyer is suggesting there might be upwards of 50,000 plaintiffs -- Each one entitled to have his or her day in court. In other words, the industry has to be given the right to defend itself against the claims of each individual consumer. I don't know how-- if you were to give each one an hour, it would still take forever. From my point of view, it's not manageable. Last week, in New York, you saw a case known as the Clay case be decertified, another tobacco class, and there the judge said the case is simply not manageable. So that's a very big problem for the future of this case.
JIM LEHRER: And that's phase three. Phase three is whether or not the class action part of this remains viable, right?
MARTIN FELDMAN: Well, that's exactly right except that it will be those arguments that will be presented by the industry very likely on appeal, during or after phase two. As soon as some money is awarded against the tobacco industry in phase two, it will appeal the very class certification that has allowed the case to come forward. And I think it will describe the very difficult, the impossibility of managing phase three.
JIM LEHRER: Professor Freshman has joined us in Miami just in time to explain the significance of a class-action suit -- why-- this is the first time a class-action suit has gone to a jury involving tobacco -- why it has not happened before and why this is so important.
CLARK FRESHMAN: Well, the basic deal with a class action is it's about efficiency. Rather than having to try the same facts over and over again and waste the court system's time, you present the common facts all at once and then in a second phase, you consider specifically what happened to individual plaintiffs. So, in the tobacco case, it's very expensive to put on all of the expert witnesses, what are possible causes of cancer, what does tobacco do? What evidence was there, what tobacco companies knew, and when -- here you have one jury here all at once. And then in the second phase, consider the relatively simple question: How much were individual plaintiffs hurt? Now, why didn't it happen before? Well, that's basically a peculiarity of Florida law. Florida makes it very easy for people to lump their cases together in a class action. As far as I can tell, it's the easiest state in the entire United States for that to happen and certainly much easier than the federal courts. That's why this case wouldn't have gotten this far as a class action in other states and why, despite the possibility of appeal, if there were another case in another state, it may very well succeed in the Florida appellate system.
JIM LEHRER: But then if it succeeds in the Florida system, it could then go through the federal system on appeal?
CLARK FRESHMAN: No. Not at all. Once it goes through the Florida system, the only way it could get to the United States Supreme Court would be number one, if there was a federal constitutional issue. Class certification is not a constitutional issue. If, however, there were a constitutional issue, such as the amount of punitive damages, then the tobacco industry could try to get the U.S. Supreme Court to take it. But you'd be better off buying a lottery ticket. The odds of getting to the U.S. Supreme Court are very, very low. They only take 40-60 cases per year. The odds that there would be a class certification issue somehow converted to a constitutional question are really completely impossible.
JIM LEHRER: All right. Explain to us, then, this was a case that was tried by six people, only six people made this decision yesterday in a Miami courtroom. And it has been reported all over the world as a landmark -- why is it landmark, because six people in Florida made this decision?
CLARK FRESHMAN: Well, it is going to cost potentially, billions and billions of dollars. In most cases, you would have one or two plaintiffs, perhaps a group of plaintiffs bringing the case and then if there was a loss, it was what their particular medical damages were, their loss of income. What this has done is to say if this is upheld on appeal or if this settles, which I think is quite likely, that everyone in the state of Florida up until now who has been damaged will not have to hire their own expert witnesses, will not have to go mano-a-mano against the tobacco companies and prove that smoking causes cancer. All they'll have to do is show what their particular medical expenses and out-of-pocket losses are for wages. So it really opens the floodgates here in Miami. Number two, the significance is, does this mean something about trials in other states? Potentially, it does. There are two bad facts that have come up in this case; one, documents that were made available due to settlements. Those will also be available in other cases. Number two, the fact that the tobacco industry has been willing to settle, now as a technical matter, the judge will tell the jury in cases, disregard what you've heard about settlement. The fact the tobacco company settled doesn't mean that they're necessarily guilty. But that's like telling people to ignore the fact there's a big pink elephant in the room. People will know the tobacco companies have been willing to settle, and it makes it very hard to believe when representatives come into court that it's so widely unfair to hold them responsible.
JIM LEHRER: Speaking of unfair, we have to go here. I'm going to be unfair to Ms. Aronson and Mr. Feldman and just ask you very briefly to say what you think the impact of this is going to be, Ms. Aronson.
MARY ARONSON: Well, I think ultimately, what's going to happen is, you know, because defendants are starting to lose cases, I think they're going to have to look for some way of bringing closure. I think we may well have to-- they may well have to come back to Washington and to Congress to find some sort of resolution such as possibly a compensation scheme.
JIM LEHRER: Mr. Feldman?
MARTIN FELDMAN: I don't believe that this class will be settled under any circumstances. I think there's quite a good chance that on appeal it is decertified. And, for me -
JIM LEHRER: Decertified, meaning the class-action part of this will not wash?
MARTIN FELDMAN: Will disappear, exactly. The other quick point I would make is that if there is any worry for the tobacco industry, I think you will see a trend where it will begin to lose individual trials like you saw in California and in Oregon for multimillion-dollar claims given the new documents that are in evidence, and I think that investors and the industry is going to have to become accustomed to those losses but not to mega losses that would come out of these types of claims.
JIM LEHRER: All right. Well, thank you, all three. Mr. Freshman, I'm sorry you had traffic problems down there in Miami. But we're delighted you finally made it. Thank you all three.