The Castano Suit: Part Two

Continued from The Castano Suit: Part One

Pulled from the archived files of the 5th Circuit Court in the case of CASTANO v. AMERICAN TOBACCO COMPANY:

“The plaintiffs initially defined the class as “all nicotine dependent persons in the United States,” including current, former and deceased smokers since 1943. Plaintiff conceded that addiction would have to be proven by each class member; the defendants argued that proving class membership will require individual mini-trials to determine whether addiction actually exists.”

In bold is a key portion of the plaintiffs’ argument which tobacco companies contended would require millions of follow-up trials to establish individual issues. Ultimately, this would be the straw that would break the camel’s back for the Castano case.

On May 24th, 1996, a day after the court’s decision and more than a year after the Castano suit was originally filed, the New York Times published an article titled, Huge Tobacco Lawsuit Is Thrown Out on Appeal. In the article, the author mentioned how judges Jerry E. Smith, John M. Duhe Jr. and Harold R. DeMoss Jr., overturned the 1995 decision that would have permitted almost any cigarette smoker in the United States to join in a suit that could have costed the tobacco industry billions of dollars in claims. The court’s decision ruled in favor with the industry’s argument that such a case would be too unwieldy to manage and sent the stocks of tobacco companies soaring. Philip Morris, the largest cigarette maker at the time, a ranking that is still held to this day, gained $5.4 billion in value in little more than an hour of trading.

In the wake of the court’s ruling, tobacco industry advocates near and far spoke out in favor of the court’s decision concerning the landmark case.

“This is a landmark decision for the tobacco industry that mutes the risk of national class actions,” said Salomon Brothers securities analyst, Diana K. Temple.

“This is definitely an important precedent for attempts to file other national class actions, and the ruling will be the precedent for many other mass-tort cases as well,” said law professor Linda Mullenix of the University of Texas Law School. Mullenix filed an earlier briefing opposing the class action on behalf of the National Association of Manufacturers.

A spokesman for Philip Morris praised the ruling in saying, “the decision sent a strong message to class-action plaintiffs’ lawyers to stop the insanity in our nation’s courts.”

Though Diane Castano and the other plaintiffs involved lost the landmark case, they were, however, able to settle with Liggett Group Inc., the smallest of the five major cigarette companies for an undisclosed amount.

After the ruling, a coalition of nearly 60 plaintiffs’ lawyers vowed to continue the fight against the nation’s tobacco companies by filing new class-action lawsuits in all 50 states.

While my search for information explicitly linking the Castano Suit with the Tobacco Master Settlement Agreement of 1998 has proved unsuccessful, I do believe the landmark suit precipitated the action on the part of the attorney generals from 46 states.

  •  – May 23rd, 1994, Mississippi Attorney General Michael Moore announced the filing of a lawsuit against the tobacco industry seeking to recoup the $940 million the state spent treating sick smokers.
  •  – August 17th, 1994, Minnesota Attorney General Hubert Humphrey III files a Medicaid suit against the tobacco industry
  •  – September 20th, 1994, the West Virginia attorney general files a Medicaid suit against the tobacco industry
  •  – December 1994, Florida Legislature passes a law making it easier to sue the tobacco industry for Medicaid cost.
  •  – February 21st, 1995, Florida attorney general Bob Butterworth files a Medicaid suit against the tobacco companies.
  •  – December 19th, 1995, Massachusetts files a Medicaid suit against the tobacco industry.
  •  – March 13th, 1996, Louisiana files a Medicaid suit against the tobacco industry.
  •  – March 28th, 1996, Texas files a Medicaid suit against the tobacco industry.
  •  – April 11th, 1996, New Jersey announces that they will file a Medicaid suit against the tobacco industry.

Suffice to say, the list of states that announced legal filings against the tobacco industry in the wake of the Castano suit is extensive. And while similar, vastly smaller lawsuits were filed in federal court before Diane Castano took her case to court; I believe it was the magnitude of the Castano Suit, which ignited more than 40 states to initiate litigation against the tobacco industry— seeking monetary, equitable, and injunction relief under various consumer-protection and antitrust laws.

Earlier in the Times article, the author mentioned that the tobacco companies could have faced billions of dollars in liability claims if the court had allowed the case to proceed.

Well, it seems as though, Philip Morris USA, R.J. Reynolds Tobacco Company, Brown & Williamson Tobacco Corp., and Lorillard Tobacco Company, could not avoid their fates in that what attorney generals vowed to continue came full circle in the Tobacco Master Settlement Agreement of 1998 where big tobacco agreed to pay a minimum of $206 billion to 46 states over the first 25 years of the agreement.

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