Tobacco Showdown 4/97
For cigarette makers, the stakes are high in a Jacksonville courtroom
Maggie Mahar
In a Jacksonville, Fla., courtroom last Monday, Act I of Raulerson v. RJR opened, and so far it looks like a cliffhanger for the tobacco industry. The suit is being brought by the sister of one Jean Connor, a smoker who died before her case made it to trial, and the stakes are high: Her attorney, Norwood S. ``Woody'' Wilner is charging RJR with negligence, fraud and civil conspiracy, and he's asking for punitive damages, which could be hefty. Not only is Wilner the
lead counsel in Liggett's recent settlement with 22 state attorneys general over Medicaid costs, he is also the fellow who shocked Wall Street last summer, winning the first standing victory in which a jury awarded damages to a former smoker. That courtroom defeat lopped $12 billion off the value of Philip Morris shares in one
day.
If Wilner wins punitive damages, there is no legal limit on the amount the jury could award. Whatever the dollar figure, the precedent would throw the barn door wide open to plaintiffs' attorneys working on behalf of cancer victims, turning what is now a procession of suits into a stampede. Indeed, Sanford Bernstein's Gary Black predicts that if the Jacksonville jury adds extra damages to ``punish'' the industry, share prices of the big three tobacco makers ``could hit all-time lows relative to the market,'' with Philip Morris dropping as low as $33 and RJR being cut down to $28. But, Black hastens to add, ``I don't think it will happen.''
Not everyone is quite as bullish as Black. Wall Street observers who attended the trial tend to agree with Smith Barney's Martin Feldman that the contest is ``too close to call,'' though Salomon Brothers' Diana Temple gamely attempts to lay odds: ``I'd say there's a 1-in-3 chance RJR will lose, 1-in-5 that Wilner will win punitive damages.''
Already, in the first week, the courtroom tension has begun to mount. The cast of characters begins with Judge Bernard Nachman of the Fourth Judical Circuit. Grey-haired, good-humored and rotund at 61, Nachman is well-liked in the courthouse: on elevators, both janitors and attorneys greet him with ``Hi, Bernie.'' Although originally from New York, Nachman isn't viewed as
particularly liberal in this conservative Southern town. ``He never talks about politics,''
says a personal friend, ``though he's very active in community causes - he's just a very sweet guy. I guess I assume he's a liberal.'' But, as Black points out, ``Nachman was also a prosecutor for a couple of years.''
Next comes Paul G. Crist of Jones Day Reavis & Pogue, the Cleveland firm that coordinates RJR's tobacco litigation nationwide. Tall, with hair that's turning silver, Crist is distinguished-looking, but not too aristocratic, and not too slick. His manner is kindly, and he can be witty.
Nonetheless, Crist's two-hour opening argument left the jury dazed, shifting in their seats, looking as if they were realizing this could be a long three weeks. Crist's speech came at the end of the afternoon, but the bigger problem may have been that he had packed too many concepts and facts into a speech he had clearly written and memorized beforehand. Crist was at his strongest when he suggested that Jean Connor was the ``missing person'' in the plaintiff's case,
indicating that Wilner's arguments would focus on the wrongs of an entire industry, not what RJR itself had done to cause Jean Connor's death.
For much of Crist's two-hour lecture, jurors strained to pay attention but rarely looked interested. Except perhaps at the very end, when, in a tenuous defense of RJR's past marketing efforts, Crist tried to argue that The Flintstones, where RJR advertised, was really a program for adults.
Plaintiff's attorney Woody Wilner does bumble, but he makes his points. Wilner's opening remarks were less polished, but he seemed to hold his audience's attention as they sat forward and focused on a CAT-scan of cancer growing in Jean Connor's lung:``You'll see something with what looks like tentacles - that's why the first scientists who saw it said it looked like a crab,'' said Wilner, using his technique of making science graphic - and memorable.
Critics call Wilner's style ``bumbling,'' and he does often shuffle his notes. But Wilner contends he could never write out his speech ahead of time: ``I don't know until I begin what will work. There are various keys to any concept - you try one, and if the jurors are staring at you blankly, you try another. When you find something that works, you draw it out, give it more time.''
Wilner's strongest argument: Jean Connor isn't on trial. The question is not whether she contributed to her own fate by smoking. ``She accepted her responsibility,'' Wilner says. The question is whether RJR's negligence was ``also a contributing cause.''
Already, Judge Nachman has impressed most observers as intelligent and even-handed, which is to say that he has frustrated both sides. Tuesday afternoon, as the lawyers battled over which jurors should make the final cut, Nachman overruled Crist's repeated objections, making it all the harder for Crist to find that impossible dream: a jury that hasn't been tainted by all of the
adverse publicity surrounding tobacco companies.
As RJR's lawyers packed up their briefcases around six o'clock on Tuesday, they looked downcast. The next morning, an attorney from Jones Day, RJR's outside counsel, told a Jacksonville cab driver, ``We're basically in a no-win situation; the best we can hope is to minimize damages.'' But in the courtroom on Wednesday, the judge was plenty tough on Wilner, too, repeatedly sustaining Crist's objections as Wilner doggedly tried to talk about what RJR said in its marketing of cigarettes after 1969, the year that Congress passed a law requiring tobacco makers to put warning labels on each pack. Four times, Judge Nachman admonished a stubborn Wilner by saying, ``The `Cigarette Labeling Act' pre-empted any other requirements - it became the supreme law of the land.'' In other words, tobacco companies cannot be held liable that the warnings on the packages weren't stronger. At one point Wilner suggested that a skull and crossbones would be appropriate.
At week's end, despite the drama down South, Wall Street had barely responded to the opening salvos of what is expected to be a three-week trial. Investors, after all, had anticipated the long-scheduled event, and tobacco stocks had already dropped from their late February highs. Philip Morris closed the week trading close to $39, RJR around $31. But traders might be interested in a comment from Salomon Brothers' Diana Temple: ``Share prices usually begin to move
toward the end of a trial.'' |
