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SIMON v. PHILIP MORRIS INC.

December 7, 2000

ELLIS SIMON; TRUDY HUNT; TONY YOUNANY; GEORGE OKO; JACQUELINE HOUNCHELL; SYLVIA WHOL, LARRY ABBOTT; ESTATE OF GEORGE E. PATTERSON; ESTATE OF WILLIE GRIER; ESTATE OF JOYCE FOGLIANO; ESTATE OF VIRGINIA OVERSTREET; ESTATE OF EVELYN SCHRIEBER; AND ESTATE OF STANLEY KESSELMAN, ON BEHALF OF THEMSELVES AND ALL OTHER PERSONS SIMILARLY SITUATED, PLAINTIFFS,
V.
PHILIP MORRIS INCORPORATED; R.J. REYNOLDS TOBACCO COMPANY; BROWN AND WILLIAMSON TOBACCO CORPORATION; B.A.T. INDUSTRIES, P.L.C. THE AMERICAN TOBACCO COMPANY; LORILLARD TOBACCO COMPANY, INC.; AND LIGGETT & MYERS, INC., DEFENDANTS. (SIMON I).



The opinion of the court was delivered by: Weinstein, Senior District Judge.

MEMORANDUM & ORDER

TABLE OF CONTENTS

I. Introduction .................................................................. 49
II. Pending Tobacco Cases ......................................................... 50 A. H.K. Porter Company v. B.A.T. Industries, et al. ........................... 51 B. National Asbestos v. Philip Morris, Incorporated, et al. ................... 51 C. Blue Cross and Blue Shield, et al. v. Philip Morris, Incorporated, et al. .. 52 D. Simon, (formerly Stugeon) et al. v. Philip Morris, Incorporated, et al. .... 52 E. Bergeron, et al. v. Philip Morris, Incorporated, et al. .................... 52 F. Falise, et al. v. American Tobacco, et al. ................................. 52 G. William Decie, et al. v. American Tobacco, et al. .......................... 52 H. James Mason, et al. v. American Tobacco, et al. ............................ 53 I. James Ebert v. Philip Morris, Incorporated, et al. ......................... 53 J. Simon, et al. v. American Tobacco, et al. .................................. 53 K. Raymark Industries v. American Tobacco, et al. ............................. 53
III. Choice of Law ................................................................. 53 A. Choice of Law Revolution: Mechanical Lex Loci to Pragmatic Interests ....... 54
 
1. Babcock v. Jackson ...................................................... 54 2. Refinements to Babcock .................................................. 57 a. Schultz .............................................................. 58 b. Cases Involving Mass. Disasters ....................................... 60 i. Airplane Crashes ................................................. 60 ii. Products liability ............................................... 61 3. History ................................................................. 62 a. Antiquity ............................................................ 63 b. Middle Ages .......................................................... 64 c. English Law .......................................................... 64 d. The Nineteenth Century and Early American Conflicts Law .............. 64 e. Current Choice of Law Theory in the United States .................... 66 4. Scholarship, Comparative Statutory Law, and Precedent in Complex Litigation .............................................................. 67 B. Constitutional Limits ...................................................... 69 C. Interest Analysis .......................................................... 71 1. New York's Conflicts of Law Principles .................................. 71 2. New York's Interests In The Instant Dispute ............................. 72 3. Depecage ................................................................ 75 D. Manageability .............................................................. 77 E. Summation .................................................................. 77
IV. Conclusion .................................................................... 78

I. Introduction

In Simon I (99 CV 1988), a class claims pursuant to Rule 23 of the Federal Rules of Civil Procedure: (1) compensatory damages for cancer due to its members' smoking, and (2) punitive damages. Simon II (00 CV 5332) involves a broader class of all persons who may have been injured by tobacco; it includes those suing in Simon I. See Simon v. Philip Morris Inc., 2000 WL 1658337 (E.D.N.Y., Nov 06, 2000) (NO. 99 CV 1988).

It is suggested that, with limited exceptions described below, the individual and class action suits pending in this court (see Part II, infra), be tried as part of Simon II; all of their allegations and claims would be embodied in Simon II. The parties may amend Simon II to include additional claims for tobacco-related injuries due to passive exposure of non-smokers and in other respects to cover the universe of private Tobacco claims covered by the proposed Simon II class action.

A sampling of individual compensatory claims could be tried in Simon II in connection with the compensation opt-out class. Trial in this court would permit decision on general issues of fact and law such as fraud and general causation applicable to the entire Simon II opt-out class. Individual's compensation claims could then be transferred to appropriate federal district courts throughout the country for decision on such issues as individual causation, individual damages and individual statutes of limitations defenses.

The number of individual compensatory claims tried in this court might be sufficient, if selected according to appropriate statistical and other principles, to provide a basis for determination of total probable compensatory damages throughout the nation. This projection might permit the jury in this court to fix total allowable punitive damages for the nation in the Simon II non-opt-out punitive class, to be disbursed in a modified form of fluid recovery to health, research and other protective institutions and to persons injured by tobacco requiring special assistance.

Daubert and other hearings would be required to determine the statistical viability of models supporting this approach. A number of such hearings have already been held and rulings made in cases being prepared for trial in this court. See Part II, infra.

It is appropriate to deal with the issue of class action certification in Simon II rather than in Simon I. Simon II, as ultimately amended, would then cover all private claims for injury as a result of Tobacco's activities, with some exceptions. See, e.g., United States v. Philip Morris, Inc., 116 F. Supp.2d 116, 2000 Daily Journal D.A.R. 10,769 (D.D.C. 2000) (federal claim for reimbursement); National Association of Attorneys General, Multistate Settlement with the Tobacco Industry, (visited Nov. 13, 2000) (http://www.tobacco.neu.edu/Extra /multistatesettlement.htm (state claims)).

Certification issues in Simon II appear to be essentially the same as those presented in Simon I, though slightly more complex in view of the broader scope and number of subclasses in Simon II. It is consonant with Rule 16 of the Federal Rules of Civil Procedure to structure the Tobacco cases pending in this court so as to limit the number of proceedings and of trials, as well as of appeals pursuant to Rule 23(f) of the Federal Rules of Civil Procedure.

Accordingly, the application for certification of Simon I was denied with a stay of the end of tolling of statutes of limitations. See Simon v. Philip Morris Inc., 2000 WL 1658337 (E.D.N.Y., Nov.6, 2000) (No. 99 CV 1988); see also, The National Asbestos Workers Medical Fund v. Philip Morris, Inc., 2000 WL 1424931 (E.D.N.Y. Sept.26, 2000) (stay of tolling). Simon II, as a class action, has an independent tolling effect.

The court will attempt to assist the parties in addressing issues likely to arise in preparation of Simon II for trial by issuing memoranda on such subjects as the propriety of the use of statistics to project probable compensatory damages as a predicate for punitive damages; Seventh Amendment implications of allowing separate juries to decide separable issues; and Rule 23 procedural issues, such as selecting subclass and class counsel, notifying members of the class, and using various methods to permit effective communication with members of the class and input of class members wishes.

Part II of this memorandum includes a summary of pending cases. Part III discusses of choice of law.

II. Pending Tobacco Cases

The pending Tobacco cases in this court have been the subject of many motions and orders in contemplation of trials. See Simon v. Philip Morris Inc., No. 99 CV 1988, 2000 WL 1658337 (E.D.N.Y., Nov 06, 2000); Simon v. Philip Morris Inc., 194 F.R.D. 73 (E.D.N.Y. 2000); Simon v. Philip Morris, Inc., 86 F. Supp.2d 95 (E.D.N.Y. 2000); National Asbestos Workers Medical Fund v. Philip Morris, Inc., No. 98 CV 1492, 2000 WL 1424931 (E.D.N.Y., Sep 26, 2000); National Asbestos Workers Medical Fund v. Philip Morris, Inc., No. 98 CV 1492, 2000 WL 1364358 (E.D.N.Y., Sep 20, 2000); National Asbestos Workers Medical Fund v. Philip Morris, Inc., No. 98 CV 1492, 2000 WL 777834 (E.D.N.Y., Jun 13, 2000); National Asbestos Workers Medical Fund v. Philip Morris, Inc., 86 F. Supp.2d 137 (E.D.N.Y. 2000); National Asbestos Workers Medical Fund v. Philip Morris, Inc., 71 F. Supp.2d 139 (E.D.N.Y. 1999); National Asbestos Workers Medical Fund v. Philip Morris, Inc., 74 F. Supp.2d 221 (E.D.N Y 1999); National Asbestos Workers Medical Fund v. Philip Morris, Inc., 74 F. Supp.2d 213 (E.D.N.Y. 1999); National Asbestos Workers Medical Fund v. Philip Morris Inc., 23 F. Supp.2d 321 (E.D.N.Y. 1998); National Asbestos Workers Medical Fund v. Philip Morris Inc., No. 97 CV 1492, 1998 WL 372410 (E.D.N Y 1998); Falise v. American Tobacco Co., No. CV 99-7392, 2000 WL 1370437 (E.D.N.Y., Sep 21, 2000); Falise v. American Tobacco Co., No. CV 99-7392, 2000 WL 1336697 (E.D.N.Y., Sep 15, 2000); Falise v. American Tobacco Co., No. CV 99-7392, 2000 WL 1292671 (E.D.N.Y., Sep 08, 2000); Falise v. American Tobacco Co., 107 F. Supp.2d 200 (E.D.N.Y. 2000); Falise v. American Tobacco Co., No. CV 99-7392, 2000 WL 1144697 (E.D.N.Y., Jul 25, 2000); Falise v. American Tobacco Co., No. CV 99-7392, 2000 WL 1010982 (E.D.N.Y., Jul 19, 2000); Falise v. American Tobacco Co., No. CV 99-7392, 2000 WL 1010978 (E.D.N.Y., Jul 18, 2000); Falise v. American Tobacco Co., 94 F. Supp.2d 316 (E.D.N.Y 2000); Falise v. American Tobacco Co., No. 99 CV 7392, 2000 WL 433097 (E.D.N.Y., Apr 18, 2000); Falise v. American Tobacco Co., 91 F. Supp.2d 525 (E.D.N.Y. 2000); Falise v. American Tobacco Co., No. 99 CV 7392, 2000 WL 264332 (E.D.N.Y., Jan 24, 2000) (No. CV-98-1492, CV-97-7658, CV-98-3287, CV-98-675); Falise v. American Tobacco Co., 193 F.R.D. 73 (E.D.N.Y. 2000); Falise v. American Tobacco Co., 241 B.R. 63 (E.D.N.Y. 1999); Falise v. American Tobacco Co., 241 B.R. 48 (E.D.N.Y. 1999); Falise v. American Tobacco Co., No. 99 CV 7392, 1999 WL 98626 (E.D.N.Y., Feb 18, 1999) (No. 97 CV 7640, 97 CV 7658, 98 CV 675); Falise v. American Tobacco Co., No. 97-CV-7640, 1998 WL 372401 (E.D.N.Y., Jul 02, 1998); Blue Cross and Blue Shield of New Jersey, Inc. v. Philip Morris, Inc., 113 F. Supp.2d 345 (E.D.N.Y. 2000); Blue Cross and Blue Shield of New Jersey v. Philip Morris, Inc., 53 F. Supp.2d 338 (E.D.N.Y. 1999); Blue Cross and Blue Shield of New Jersey, Inc. v. Philip Morris, Inc., 36 F. Supp.2d 560 (E.D.N.Y. 1999); Blue Cross and Blue Shield of New Jersey, Inc. v. Phillip Morris, Inc., No. 98 CV 3287, 1999 WL 104815 (E.D.N.Y., Feb 25, 1999); Bergeron v. Philip Morris, Inc., 100 F. Supp.2d 164 (E.D.N Y 2000); Bergeron v. Philip Morris, Inc., No. 99 CV 6142, 2000 WL 748144 (E.D.N.Y., Jun 08, 2000); H.K. Porter Co., Inc. v. American Tobacco Co., 71 F. Supp.2d 73 (E.D.N.Y. 1999); In re Tobacco Litigation, Eastern Dist. of New York, 193 F.R.D. 92 (E.D.N.Y. 2000); In re Tobacco Litigation, 192 F.R.D. 90 (E.D.N.Y. 2000); In re Simon (II) Litigation, No. 00 CV 5332, 2000 WL 1252182 (E.D.N.Y., Sep 06, 2000) (98 CV 0675, 99 CV 6142, 98 CV 1492, 97 CV 7658, 99 CV 1988, 98 CV 3287, 99 CV 7392, 00 CV 4632).

Set out below are brief descriptions of the pending cases.

A. H.K. Porter Company v. B.A.T. Industries, et al, 97 CV 07658 (filed 12/31/97).

Plaintiff has paid substantial sums to those injured by inhaling residuals of its asbestos products. It sues tobacco producers to recover that portion of damages attributable to smoking. Motions to dismiss for failure to state a cause of action, for lack of jurisdiction and to settle discovery disputes have been decided. A trial date has not been set, but discovery is largely covered by that in related cases so that the case is almost ready for trial. See docket entries 1-148.

A writ of mandamus sought by defendants was denied by the court of appeals. See docket entry 149. The punitive damage aspects are stayed with the view that they can be dealt with in Simon II.

B. National Asbestos v. Philip Morris, Incorporated, et al, 98 CV 01492 (filed 2/27/98).

This case was brought as a class action on behalf of some four thousand "collectively-bargained" health and welfare trust funds. The putative class members are "all self insured, multi-employer benefit plans . . . in the building trades and their trustees." They seek to recover money expended for health and welfare benefits for fund beneficiaries injured by tobacco.

A variety of dispositive motions have been denied. Discovery has been extensive; a series of discovery orders has been issued. Certification of the class has been denied and this order is being appealed. See docket entries 393-399.

The court is prepared to try one of the cases in the class as a "test." It will then reconsider the certification issue. Discovery and other motion practice has proceeded sufficiently to permit an early trial of a test case. See docket entries 1-40. A trial date for May 12 has been tentatively set by the magistrate judge. The punitive damage aspects are stayed as in H.K. Porter. See Part II A, supra.

C. Blue Cross and Blue Shield, et al v. Philip Morris Incorporated, et al., 98 CV 03287 (filed 4/29/98).

Twenty-six Blue Cross/Blue Shield health care plans located across the country bring claims similar to those in National Asbestos. A series of dispositive, Daubert, and in limine motions have been decided. Discovery, Daubert, and in limine practice has gone forward to the point where a test case can be tried. See docket entries 1-616. Trial of the claims of Empire Blue Cross and Blue Shield of New York has been set to follow the trial in Falise, Part F, infra. See docket entry 510. The punitive damage aspects are stayed as in H.K. Porter. See Part II A, supra.

D. Simon, (formerly Stugeon) et al. v. Philip Morris Incorporated, et al., 99 CV 01988 (filed 04/09/99) (Simon I).

This is a national class action on behalf of:

All persons residing in the United States, or who were residents of the United States at the time of their deaths, who have a 20 pack-year history of smoking Defendants' cigarettes and who, individually or through an estate or other legal representative, had a timely claim as of April 9, 1999 for personal injury damages or wrongful death arising from cancer of the lung. A pack-year is one package of cigarettes consumed per day per year.

A series of dispositive and discovery motions have been decided, but the case is not yet ready for trial. See docket entries 1-150. A motion for certification, as already noted, has been denied. See Part I, supra. The punitive damage aspects are stayed as in H.K. Porter. See Part II A, supra.

E. Bergeron, et al. v. Philip Morris, Incorporated, et al., 99 CV 06142 (filed 9/29/99).

Plaintiffs, trustees of the Massachusetts State Carpenters Health Benefits Fund, bring this action on somewhat the same grounds as National Asbestos, Part II B, infra. A series of disposition and discovery motions have been decided, but the case is not ready for trial. See docket entries 1-61. The punitive damages aspects are stayed as in H.K. Porter. See Part II A, supra.

F. Falise, et al. v. American Tobacco, et al., 99 CV 7392 (filed 11/12/99).

This is essentially the same case as one brought earlier, which was dismissed on jurisdictional grounds. Extensive dispositive, discovery Daubert and in limine motions have been decided. See docket sheet entries 1-515. It was set for trial in July of this year, but was stayed by the court of appeals pending a decision on a mandamus petition. Mandamus has now been denied, and the trial has commenced. The punitive damage aspects were stayed as in H.K. Porter. See Part II A, supra, but the parties have been informed that, should there be a viable claim for such damages, punitive damage issues will be tried on a bifurcated basis following the ongoing trial on compensatory damages.

G. William Decie, et al v. American Tobacco, et al., 2000 CV 02340 (filed 4/21/2000).

This class action has not proceeded far. Stipulations extending time to answer have been filed. See docket entries 1-14. The punitive damage aspects are stayed as in H.K. Porter. See Part II A, supra.

H. James Mason, et al v. American Tobacco, et al. 2000 CV 0442 (filed 08/01/2000).

This class action was transferred from the Northern District of Texas (97 CV-293-R). It has not proceeded appreciably in this court. See docket entries 1-32. A motion has been made, but not decided, to consolidate this case with Simon II as a subclass. See docket entry 32. The punitive damage aspects are stayed as in H.K. Porter. See Part II A, supra.

I. James Ebert v. Philip Morris, Incorporated, et al., 2000 CV 04632 (filed 8/09/2000).

This action has not proceeded appreciably. See docket entry 1. The punitive damage aspects are stayed as in H.K Porter. See Part II A, supra.

J. Simon, et al. v. American Tobacco, 2000 CV 05332 (filed 09/06/2000) (Simon II).

This class action includes as subclasses all the tobacco cases pending except Decie. See Part G. It seeks both compensatory and punitive damages. While motion and discovery proceedings have not been extensive in this case, they are fairly advanced because the case incorporates all the related proceedings described in Parts A-I. See docket entries 1-18. The parties have proposed counsel to represent the subclasses. A request for approval of subclass counsel was ordered published. See In Re Simon II, order dated October 23, 2000.

K. Raymark Industries v. American Tobacco, et al., 1998 CV 0675 (filed 01/30/98).

After considerable preparation for trial in the Eastern District of New York the case was transferred to the Eastern District of Pennsylvania by the Multidistrict Litigation Panel. See docket entries 1-74. A motion to retransfer the case to this court is pending elsewhere. The case is similar to the Falise case. See Part II F, supra.

III. Choice of Law

This memorandum deals primarily with conflicts of laws as they affect an opt-out compensatory national class. The proposed non-opt out, national punitive damage class will be treated in a separate memorandum. The need to fix and limit punitive damages in one proceeding because of constitutional and, perhaps, asset constraints on the defendants, in addition to different punitive rules among the states and proposals to devote the punitive damage recovery to national research, treatment and the special needs of particular injured persons suggests that punitive damage conflicts issues be addressed separately.

A choice of law question is presented when a dispute implicates the interests of two or more states and application of each state's law would be consistent with the Full Faith and Credit and Due Process Clauses of the Constitution. See Diehl v. Ogorewac, 836 F. Supp. 88, 91 (E.D.N.Y. 1993); Cooney v. Osgood Machinery, 81 N.Y.2d 66, 70-71, 612 N.E.2d 277, 279, 595 N.Y.S.2d 919, 921 (1993). These modest constitutional requirements are met if each state whose law is sought to be applied has "significant contacts or significant aggregation of contacts creating state interests, such that choice of its law is neither arbitrary nor fundamentally unfair." Allstate Ins. Co. v. Hague, 449 U.S. 302, 313, 101 S.Ct. 633, 66 L.Ed.2d 521 (1981). See also Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 818-23, 105 S.Ct. 2965, 86 L.Ed.2d 628 (1985).

A federal court sitting in diversity applies the choice of law principles of the forum state, in this case New York, to decide which state's substantive law controls. See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). Choice of law rules apply equally to claims brought under common law and statutory law. See, e.g., Bergeron v. Philip Morris, 100 F. Supp.2d 164, 170 (2000) (applying New York choice of law rules to resolve conflicts between the New York Consumer Protection Act and Massachusetts' Unfair Deceptive Trade Practices Act); see also Volt Systems Development Corp. v. Raytheon Co., 155 A.D.2d 309, 309-310, 547 N.Y.S.2d 280 (N.Y.App. Div. 1989) (applying New York choice of law principles to Massachusetts' Unfair Deceptive Trade Practices Act).

For federal substantive law issues the court will apply the applicable national law (subject to circuit and district differences). Where both state and federal substantive claims are made in the same case — as here — the law of Klaxon continues to apply to state issues. In practice, however there is a tendency to emphasize forum law, for ease of administration of the litigation, as by utilization of state and federal jury charge books the judge is likely to have on chambers shelves.

A. Choice of Law Revolution: Mechanical Lex Loci to Pragmatic Interests

1. Babcock v. Jackson

More than a third of a century ago, a sharp change in choice of law standards resulted when Chief Judge Stanley Fuld published his widely followed opinion in Babcock v. Jackson, 12 N.Y.2d 473, 191 N.E.2d 279, 240 N.Y.S.2d 743 (1963). See Hamilton v. Accu-Tek, 47 F. Supp.2d 330, 335 (E.D.N.Y. 1999); Maurice Rosenberg et al., Conflict of Laws (Teacher's Manual) 86 (10th ed. 1996) ("Babcock is widely regarded as the landmark case that began the change in approaches to choice of law by United States courts."); Harold L. Korn, The Choice of Law Revolution: A Critique, 83 Colum.L.Rev. 772, 827 (1983). Babcock adopted for New York an "interest analysis" for torts conflicts departing from the American standard application of lex loci delicti, the law of the place of the wrong. Compare 2 J. Beale, A Treatise on the Conflict of Laws 1288 (1935) ("It is impossible for a plaintiff to recover in tort unless he has been given by some law a cause of action in tort; and this law can only be given by the law where the tort was committed.").

The foundation of this current approach is that: "[j]ustice, fairness and, the best practical result, may best be achieved by giving controlling effect to the law of the jurisdiction which, because of its relationship or contact with the occurrence or the parties has the greatest concern with the specific issue raised in the litigation." Babcock v. Jackson, 12 N.Y.2d at 481, 191 N.E.2d 279, 240 N.Y.S.2d 743 (internal quotation marks and citation omitted). Since Babcock requires a return to basic principles, eschewing mechanical rules in favor of a practical analysis of the interests of the various states involved, Judge Fuld's historic words bear repeating. He first noted ...


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