Philip Morris U.S. Inc. v. Duignan

Full title: PHILIP MORRIS USA INC. and R.J. REYNOLDS TOBACCO COMPANY, Appellants, v…

Court: Florida Court of Appeals, Second District

Date published: May 5, 2023

No. 2D20-2714 (Fla. Dist. Ct. App. May. 5, 2023)

Opinion

2D20-2714

05-05-2023

PHILIP MORRIS USA INC. and R.J. REYNOLDS TOBACCO COMPANY, Appellants, v. KEVIN DUIGNAN, as personal representative for the Estate of Douglas Clarence Duignan, Appellee.

Geoffrey J. Michael of Arnold & Porter Kaye Scholer LLP, Washington, DC; Kenneth J. Reilly of Shook, Hardy & Bacon L.L.P., Miami; and Terri L. Parker of Shook, Hardy & Bacon L.L.P., Tampa, for Appellant Philip Morris USA Inc. Kenneth M. Grose of Jones Day, Columbus, Ohio; Charles R.A. Morse of Jones Day, New York, New York; and Troy A. Fuhrman of Hill, Ward & Henderson, P.A, Tampa, for Appellant R.J. Reynolds Tobacco Company. David J. Sales and Daniel R. Hoffman of David J. Sales, P.A., Sarasota; Gary M. Paige and Cassandra Lombard of Gordon & Partners, P.A., Davie; and James W. Gustafson, Jr. of Searcy Denney Scarola Barnhart & Shipley, P.A., Tallahassee, for Appellee Kevin Duignan, as personal representative for the Estate of Douglas Clarence Duignan.

MORRIS, CHIEF JUDGE

Appeal from the Circuit Court for Pinellas County; Thomas M. Ramsberger, Judge.

On Remand from the Florida Supreme Court

Geoffrey J. Michael of Arnold & Porter Kaye Scholer LLP, Washington, DC; Kenneth J. Reilly of Shook, Hardy & Bacon L.L.P., Miami; and Terri L. Parker of Shook, Hardy & Bacon L.L.P., Tampa, for Appellant Philip Morris USA Inc.

Kenneth M. Grose of Jones Day, Columbus, Ohio; Charles R.A. Morse of Jones Day, New York, New York; and Troy A. Fuhrman of Hill, Ward & Henderson, P.A, Tampa, for Appellant R.J. Reynolds Tobacco Company.

David J. Sales and Daniel R. Hoffman of David J. Sales, P.A., Sarasota; Gary M. Paige and Cassandra Lombard of Gordon & Partners, P.A., Davie; and James W. Gustafson, Jr. of Searcy Denney Scarola Barnhart & Shipley, P.A., Tallahassee, for Appellee Kevin Duignan, as personal representative for the Estate of Douglas Clarence Duignan.

MORRIS, CHIEF JUDGE

In this Engle ¹ progeny case on remand from the Florida Supreme Court, we reverse the final judgment and remand for a new trial on punitive damages and for the trial court to reduce the amount of compensatory damages based on the smoker's comparative fault.

1 Engle v. Liggett Grp., Inc., 945 So.2d 1246 (Fla. 2006).

I. Background

A. Duignan I

Douglas Duignan died in 1992 from lung cancer at the age of 42. Kevin Duignan, the personal representative of Douglas's estate (the Estate) filed a wrongful death lawsuit against Philip Morris USA Inc. and R.J. Reynolds Tobacco Company (the tobacco companies). The case resulted in a jury verdict in favor of the Estate on its claims of negligence, strict liability, fraud by concealment, and conspiracy to commit fraud by concealment. Philip Morris USA, Inc. v. Duignan (Duignan I), 243 So.3d 426 (Fla. 2d DCA 2017). The jury awarded $6 million in compensatory damages, apportioning 67% fault to the tobacco companies and 33% fault to Douglas. The jury also awarded a total of $6 million in punitive damages. The tobacco company appealed, and this court reversed for a new trial primarily based on the trial court's error relating to the readback of testimony. Id. at 430-31.

This court also addressed a separate issue raised by the tobacco companies that would present itself again on remand. Id. at 438-39. The tobacco companies argued that the trial court erred in giving a jury instruction that did not require Douglas to have relied on a statement by the tobacco companies for the reliance element of the fraud claims. Id. at 438. This court disagreed with the tobacco companies, holding that "a special jury instruction demanding reliance on 'a statement' was not required." Id. at 443 (emphasis added). This court held that a proper instruction would have "required reliance on either a statement or on a misapprehension as to a concealed or omitted fact." Id. The court found that the jury instruction given was erroneous and misleading because it did not require a finding "that the material information the tobacco companies concealed or omitted was in fact important to [Douglas's] decisions to begin or continue smoking." Id. This court remanded for a new trial on all issues. Id. at 445 (noting that the jury instruction error would, at a minimum, require a new trial on the fraud claims but declining to address whether a new trial would be required on punitive damages because a new trial was required on all issues due to the trial court's error regarding the readback of testimony).

B. Duignan II

On remand, a new trial was held and the trial court instructed the jury in accordance with our holding in Duignan I. At the conclusion of the first phase of the bifurcated trial, the jury returned a verdict in favor of the Estate. The jury specifically found that Douglas was addicted to cigarettes containing nicotine and that such addiction was a legal cause of his lung cancer. Thus, the jury found in favor of the Estate on its claims of negligence and strict liability. See Philip Morris USA, Inc. v. Douglas, 110 So.3d 419, 428-30 (Fla. 2013) (explaining that Engle's Phase I findings established general causation and liability on claims of negligence and strict liability but that each plaintiff must show individual causation by showing that addiction to defendant's products containing nicotine was a legal cause of his injuries); see also Duignan I, 243 So.3d at 432 ("A finding that Douglas Duignan was a member of the Engle class coupled with the preclusive effect of the retained Phase I findings on strict liability and negligence resolved the Estate's claims for strict liability and negligence, with the exception of the issues of comparative negligence and damages ...."). The jury went on to find that the tobacco companies' fault or negligence totaled 70%² and that Douglas's fault or negligence was 30%. Next, the jury found in favor of the Estate on the issues of fraud by concealment and conspiracy to commit fraud by concealment.³ Then, the jury awarded $2.75 million in compensatory damages. Last on the verdict form, the jury found that punitive damages are warranted against both tobacco companies. A second phase of trial was conducted on punitive damages, after which the jury awarded a total of $24 million in punitive damages, $12 million against each tobacco company. The trial court entered judgment in the amount of damages awarded by the jury.⁴

2 The jury found Philip Morris USA Inc. 40% at fault and R.J. Reynolds Tobacco Company 30% at fault.

3 The jury answered "Yes" to the following two questions related to the fraud claims:

As to each Defendant, state whether Douglas Duignan reasonably relied to his detriment on either: (a) statements that omitted material information concerning the health effects or addictive nature of cigarettes, or (b) a misapprehension caused by the concealment or omission of such information, and if so, whether such reliance was a legal cause of his lung cancer?

State whether Douglas Duignan reasonably relied to his detriment on either: (a) statements in furtherance of the agreement to conceal that omitted material information concerning the health effects or addictive nature of cigarettes, or (b) a misapprehension caused by the agreement to conceal or omit such information, and if so, whether such reliance was a legal cause of his lung cancer?

4 The trial court did not reduce the compensatory damages by Douglas's share of fault or negligence as is generally required under the comparative fault statute, see § 768.81, Fla. Stat. (2011), because "when a jury finds for an Engle progeny plaintiff on intentional tort claims, the plaintiff's award may not be reduced by comparative fault." Schoeff v. R.J. Reynolds Tobacco Co., 232 So.3d 294, 305 (Fla. 2017).

The tobacco companies filed this appeal and maintained, among other things, that our decision in Duignan I was wrongly decided. By that time, the First District had reached a different result on the jury instruction issue we decided in Duignan I. In R.J. Reynolds Tobacco Co. v. Prentice (Prentice I), 290 So.3d 963, 966 (Fla. 1st DCA 2019), the First District held that a jury instruction on fraudulent concealment must inform the jury that the plaintiff had detrimentally relied on a statement by the tobacco company, as opposed to a concealment or omission. Prentice I relied on R.J. Reynolds Tobacco Co. v. Whitmire, 260 So.3d 536 (Fla. 1st DCA 2018), which held that an Engle plaintiff must prove that they relied to their detriment on false statements from the tobacco companies. Accordingly, in the second Duignan appeal, this panel wrote only to certify conflict with the First District's decision in Prentice I and two other First District cases that followed. Philip Morris USA Inc. v. Duignan (Duignan II), 338 So.3d 308, 309 (Fla. 2d DCA 2022). We affirmed the judgment without further comment on the other issues raised by the tobacco companies. Id.

C. Prentice II

Meanwhile, the Florida Supreme Court had accepted jurisdiction to review Prentice I. Prentice v. R.J. Reynolds Tobacco Co., No. SC20-291, 2020 WL 4590156, at *1 (Fla. Aug. 11, 2020). In its opinion deciding the case, the supreme court explained the "dispute in clear terms": the tobacco companies argued "that an Engle progeny plaintiff must prove reliance on a statement," whereas the plaintiff argued that it only had to "prove reliance on silence." Prentice v. R.J. Reynolds Tobacco Co. (Prentice II), 338 So.3d 831, 837 (Fla. 2022). The supreme court agreed with the tobacco companies' argument, holding that

to prevail on fraudulent concealment and concealment conspiracy claims, an Engle progeny plaintiff must prove reliance on a statement that was made by an Engle defendant (for a concealment claim) or co-conspirator (for a conspiracy claim) and that concealed or omitted material information about the health effects or addictiveness of smoking cigarettes.

Id. ⁵ The court looked to the Engle class case and relied on "class counsel's argument at the Phase I charge conference, the Phase I jury instruction, and the Phase I jury finding." Id. at 839. The court noted that "[t]he reasoning underlying [its] holding [was] straightforward":

The Engle plaintiffs pursued a "fraud by concealment" theory that the tobacco defendants chose to speak and then did so incompletely and misleadingly. It was only through their incomplete statements that the Engle defendants were able to create a false impression in the minds of listeners. Only recipients of the defendants' statements were capable of being deceived by those statements. No statements, no deception, no causation.

Id. at 840. The Prentice II court held that the jury instruction in that case, which did not require a finding of reliance on a statement, was erroneous and prejudicial because it could have reasonably misled the jury "into finding liability based on mere nondisclosure, without connecting that nondisclosure to [the smoker's] injury." Id. at 842. The Prentice II court disapproved of Duignan I and similar cases from the Third and Fourth Districts. Id. at 843.

5 Even though the instruction at issue in the Prentice cases related to "concealment conspiracy and not for fraudulent concealment," the supreme court treated the "claims interchangeably." 338 So.3d at 837.

As a result, the Florida Supreme Court granted review of this panel's decision in Duignan II, quashed the decision, and remanded the case to this court "for reconsideration upon application of" Prentice II. Philip Morris USA, Inc. v. Duignan (Duignan III), 351 So.3d 1092 (Fla. 2022).

II. The Issues on Remand

We now address only the issues presented by Prentice II; we do not disturb the other issues decided in Duignan II. The parties were granted leave to file supplemental briefs on the remand issues. Both parties agree that under Prentice II, error occurred on the fraud claims. They disagree on what relief is warranted and whether the error on the fraud claims requires a new trial on the claims of liability and punitive damages. The tobacco companies argue that this court should order a complete new trial on all claims because the issues are interwoven with the fraud claims. At the very least, the tobacco companies argue, a new trial is required on punitive damages. The Estate urges this court to remand with directions to reduce the compensatory damages award by Douglas's share of fault⁶ and leave the remaining jury findings intact. In that event, the Estate would forego the right to retry the fraud claims. The Estate claims that the "two-issue rule" prevents a retrial of the negligence and strict liability claims. The Estate also argues that a new trial on punitive damages is not warranted.

6 See Schoeff, 232 So.3d at 301-02 (recognizing that the comparative fault statute requires reduction of damages for negligence claims, including strict liability claims, in the absence of fraud claims).

A. Claims of Liability and Comparative Negligence

The tobacco companies argue that all of the issues are intertwined with the fraud claims, relying on the First District's disposition in Prentice I. After determining that the trial court had given an erroneous jury instruction on the conspiracy claim, the Prentice I court reversed for a new trial on all issues because "the issues of negligence, conspiracy, comparative fault, compensatory damages, and punitive damages are inextricably intertwined." 290 So.3d at 968. From the court's description in the opinion, it appears that the jury was asked to decide the fraud issues before deciding comparative fault and that the court thus concluded that the issues of comparative fault relate to the fraud claims: "the verdict on comparative fault reflected the jury's finding that [the tobacco company] was liable for the claims of negligence and conspiracy." Id. at 968.

We disagree with the tobacco companies that we should follow the disposition analysis in Prentice I and remand for a new trial on the issues of negligence, strict liability, and comparative fault in this case. First, we note that in Prentice II, the supreme court declined to address the plaintiff's "fallback argument that the First District erred by vacating the entire judgment, not just the verdict on the" fraud claim. 338 So.3d at 836. Second, we do not believe that the fraud claims are intertwined with the other claims of liability and comparative negligence. As the dissent in Prentice I explained, negligence and strict liability are separate and independent causes of action from the fraud claims:

[The tobacco company]-even if it was entitled to the jury instruction it sought on its conspiracy claim-would be entitled to a new trial on that claim only. It would not be entitled to a new trial on the negligence and strict liability claims, which are each a separate and independent basis for liability against [the tobacco company]. Common sense tells us that a tortfeasor who injures another person by negligence (or strict liability)-as in this case-can be held liable for those acts regardless of whether the tortfeasor's conspiracy to injure that person succeeded or failed.... A retrial of the conspiracy claim against [the tobacco company] would have no effect on, and provide no basis for negating, the negligence and strict liability claims against [the tobacco company] for which the jury found liability and damages (the latter would be the same with or without a conspiracy).

Prentice I, 290 So.3d at 971 (Makar, J., dissenting).⁷

7 We note that in deciding the jury instruction issue, the Prentice I majority relied on Whitmire, 260 So.3d at 541, which did not order a new trial on the nonfraud claims or comparative fault. See Whitmire, 260 So.3d at 541 (remanding "for an order granting the directed verdict [on the fraud claims] and reducing the compensatory damage award to deduct the decedent's comparative fault").

As for Douglas's comparative negligence, it is relevant only to the negligence and strict liability claims and not the fraud claims. See Schoeff, 232 So.3d at 302-04. This is supported by the jury instructions and the order of the interrogatories on the verdict form. The jury was instructed that the Estate

accepts that in combination with the wrongful acts of [the tobacco companies], Douglas Duignan bears some partial responsibility, but less than 100 percent of responsibility, related to the frequency and duration of his efforts to quit smoking later in life.

This statement does not apply to [the Estate's] claims for fraudulent concealment or conspiracy to fraudulently conceal.

(Emphasis added.) In addition, the verdict form first asked the jury to decide whether Douglas was addicted to cigarettes containing nicotine and, if so, whether the addiction was the legal cause of his lung cancer, thus settling the claims of negligence and strict liability. The next question asked the jury to apportion the percentage of fault or negligence of the tobacco companies and Douglas. The jury was asked to apportion fault or negligence before it was asked to decide the issues of fraud and fraudulent concealment. See Schoeff, 232 So.3d at 306.⁸ This case is thus distinguishable from Prentice I because the jury here was specifically instructed that the comparative negligence of Douglas does not apply to the fraud claims and the order of the interrogatories on the verdict form reflect that.

8 In Schoeff, the court considered the tobacco companies' argument that the plaintiff had waived her claim that the comparative fault statute applied only to her negligence and strict liability claims and not her fraud claims. 232 So.3d at 305. In rejecting that argument, the court relied in part on the order of the interrogatories on the verdict form, agreed to by the tobacco companies, which "listed the intentional torts after the interrogative about apportionment [of fault or negligence], which immediately followed the negligence claims." Id. at 306 (emphasis added).

This case is further distinguishable from Prentice I because the two-issue rule did not apply in that case.

The "two[-]issue rule" provides:

[W]here there is no proper objection to the use of a general verdict, reversal is improper where no error is found as to one of two issues submitted to the jury on the basis that the appellant is unable to establish that he has been prejudiced.

Whitman v. Castlewood Int'l Corp., 383 So.2d 618, 619 (Fla. 1980). The rule is based on the principle that reversal is improper where no error is found as to one of the issues that

can independently support the jury's verdict. See Colonial Stores, Inc. v. Scarbrough, 355 So.2d 1181, 1186 (Fla. 1977). ....

When a general verdict for the plaintiff is on review, the rule is applied by focusing on the causes of action, such that an appellate claim of error raised by the defendant as to one cause of action cannot be the basis for reversal where two or more theories of liability (or causes of action) were presented to the jury.

Barth v. Khubani, 748 So.2d 260, 261 (Fla. 1999) (second alteration in original) (footnote omitted).

[A]lthough it may seem that injustice might result from application of the "two[-]issue rule," the rule is an economical tool that limits appellate review to issues that actually affect the case and that litigants may avoid application of the rule by simply requesting a special verdict that would illuminate the jury's decision making process and the [e]ffect of any alleged error: "It should be remembered . . . that the remedy is always in the hands of counsel."

Id. (quoting Colonial Stores, Inc., 355 So.2d at 1186). The Prentice I court declined to apply the two-issue rule because the tobacco company "timely objected to the use of the general verdict form approved by the trial court and submitted a special verdict form." Prentice I, 290 So.3d at 969 n.6 (citing Whitman, 383 So.2d at 619).

But here, the two-issue rule applies. The plaintiffs alleged four theories of liability against the tobacco companies, and there has been no error found on the negligence and strict liability claims submitted to the jury. A general verdict was submitted to the jury on damages, and the tobacco companies did not object or request a special verdict form apportioning the amount of compensatory damages to the four separate claims of liability. See City of Boynton Beach v. Weiss, 120 So.3d 606, 611 (Fla. 4th DCA 2013) (holding that two-issue rule precludes reversal on error relating to one cause of action where plaintiff alleged four separate causes of action but "damages were determined only once and not apportioned to any particular claim"); Johnson v. Thigpen, 788 So.2d 410, 415 (Fla. 1st DCA 2001) (holding that reversal was improper where error occurred as to one theory of liability but defendant did not object to general verdict form that "did not have separate measures of damages for each of the four causes of action").⁹ The tobacco companies did not object to the verdict form even though at the time of the second trial in February 2020, the tobacco companies were aware of the First District's 2019 decision and disposition in Prentice I.

9 We note that the supreme court has suggested in dicta that damages in Engle progeny cases cannot be allocated among the different claims of liability. In deciding whether the comparative fault statute applies to fraud claims in Engle cases, the supreme court stated that "[c]ompensatory damages in Engle progeny cases cannot be allocated among the intentional tort and simple negligence claims without violating [the] rule against double damages," i.e., that "a defendant may not be required to pay twice for the same element of damages." Schoeff, 232 So.3d at 302. The court reasoned that in Engle progeny cases, "the same injuries-a smoker's illness or death and survivors' damages-are the result of both negligence and intentional torts." Id. Even though this dicta language suggests that a special verdict allocating damages to the various claims of liability would be inappropriate in Engle progeny cases, this language also supports the conclusion that the negligence and strict liability claims alone would support the jury's award of compensatory damages in this case.

The tobacco companies rely on two cases from other districts in arguing that a new trial on all claims is appropriate. But neither case considered or addressed whether the issues are intertwined or the two-issue rule in remanding for a new trial on all claims. Cf. R.J. Reynolds Tobacco Co. v. Hamilton, 316 So.3d 338, 341-43 (Fla. 4th DCA 2021) (reversing on an issue relating to conspiracy to commit fraudulent concealment claim but remanding for new trial on nonfraud claims also "[b]ecause the jury did not specify the amounts attributable to the fraud claim and non-fraud claims"); Philip Morris USA Inc. v. Gentile, 281 So.3d 493, 497 (Fla. 4th DCA 2019) (reversing for trial court to enter a directed verdict in favor of tobacco company on fraud-based claims but remanding for "a new trial on the remaining negligence and strict liability claims" "because the jury awarded compensatory damages without specifying the amounts attributable to the non-fraud claims"). And we note that the dispositions in those two Fourth District cases are inconsistent with the dispositions in two prior Fourth District cases. R.J. Reynolds Tobacco Co. v. Buonomo, 138 So.3d 1049, 1053 (Fla. 4th DCA 2013) (affirming judgment and damages awarded on the plaintiff's strict liability and negligence claims but reversing for new trial on fraud claims), quashed on other grounds by Nos. SC14-81, SC14-83, 2016 WL 374082, at *1 (Fla. Jan. 26, 2016); Philip Morris USA, Inc. v. Kayton, 104 So.3d 1145, 1153 (Fla. 4th DCA 2012) (affirming "the judgment and damages awarded on appellee's strict liability and negligence claims, but revers[ing] the entry of judgment on her claim for conspiracy to commit fraudulent concealment" and remanding for a new trial on conspiracy claim), quashed on other grounds by Nos. SC13-171, SC13-243, 2016 WL 390261, at *1 (Fla. Feb. 1, 2016).

For the reasons explained, the tobacco companies are not entitled to a new trial on the negligence or strict liability claims or comparative fault. Moreover, we do not remand for a new trial on the fraud claims because the Estate foregoes its right to retry the fraud claims. The Estate concedes that in the absence of fraud claims, the full amount of compensatory damages awarded by the jury cannot stand and should be reduced by the comparative negligence found by the jury. See Schoeff, 232 So.3d at 301-02 (recognizing that the comparative fault statute requires reduction of negligence claims, including strict liability claims); see also Whitmire, 260 So.3d at 541 (remanding "for an order granting the directed verdict [in favor of the tobacco company on the fraud claims] and reducing the compensatory damage award to deduct the decedent's comparative fault").

B. Punitive Damages

Having concluded that a new trial is not required on the issues of negligence, strict liability, or comparative negligence, we turn to whether a new trial is required on punitive damages. The two-issue rule does not apply to the issue of punitive damages because punitive damages are a separate measure of damages. Cf. Johnson, 788 So.2d at 415 ("The key to applying the two-issue rule is whether each claim has a separate measure of damages. The two-issue rule applies where the finding of liability on one claim entitles the plaintiff to receive the total amount of damages attributable to both theories of liability." (citing First Interstate Dev. Corp. v. Ablanedo, 511 So.2d 536 (Fla. 1987))). Entitlement to punitive damages was listed separately on the verdict form, with the jury awarding a separate amount of punitive damages in a second phase of trial.

"[A] demand for punitive damages is 'not a separate and distinct cause of action; rather it is auxiliary to, and dependent upon, the existence of an underlying claim.' "Soffer v. R.J. Reynolds Tobacco Co., 187 So.3d 1219, 1221 (Fla. 2016) (quoting Liggett Grp., Inc. v. Engle, 853 So.2d 434, 456 (Fla. 3d DCA 2003), quashed in part by Engle, 945 So.2d at 1254). Here, the jury found in favor of the Estate on the four underlying claims of liability. While the standard for punitive damages requires a finding of gross negligence or intentional misconduct, an Engle plaintiff may seek punitive damages based on the underlying claims of negligence and strict liability, absent claims of fraud, as long as the plaintiff can meet that standard. See Soffer, 187 So.3d at 1232-33 (citing § 768.72(2), Fla. Stat. (2005)). However, because an error occurred on two of the underlying claims on which the punitive damages may have been based in this case, i.e., the fraud claims, it cannot be said that there is no reasonable possibility that the error on the fraud claims contributed to the jury verdict on the issue of punitive damages. See Special v. W. Boca Med. Ctr., 160 So.3d 1251, 1256-57 (Fla. 2014) (holding that in civil cases, "[u]nless the beneficiary of the error proves that there is no reasonable possibility that the error contributed to the verdict, the error is harmful"). In making its decision on entitlement to punitive damages, the jury was instructed to consider the conduct of the tobacco companies that harmed Douglas. In determining the amount of punitive damages, the jury was instructed to consider evidence presented during the first phase and the misconduct that caused harm to Douglas. In closing arguments in both phases, the Estate argued that in deciding punitive damages, the jury should rely on evidence that was introduced relating to the fraud claims. In addition, the jury awarded $12 million against each tobacco company, when the Estate asked only for an award of $9,479,452 in punitive damages against each tobacco company. For these reasons, we cannot say that the punitive damages determinations were not affected by the error on the fraud claims.

III. Conclusion

We reverse the final judgment. We remand for a new trial on the issues of entitlement and amount of punitive damages. We also remand with directions for the trial court to reduce the amount of compensatory damages based on Douglas's comparative fault. The trial court shall set aside the jury's findings on the fraud claims based on the Estate's concession.

Reversed and remanded.

KELLY and LABRIT, JJ., Concur.

Opinion subject to revision prior to official publication.