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Eleventh Circuit Upends Florida’s Tobacco Litigation Framework

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The Eleventh Circuit Court of Appeals has determined that Florida’s “Engle” litigation framework—under which a plaintiff may rely on a former class action’s generic jury findings about nicotine cigarettes to establish a particular tobacco company’s strict liability and negligence—effectively operates as a state ban on cigarettes. The court reasoned that such a ban contravenes Congress’s aim to regulate, but not ban cigarettes, and is thus preempted by federal law. See Graham v. R.J. Reynolds Tobacco Co., No. 13-14590, 2015 U.S. App. LEXIS 5657 (11th Cir. Apr. 8, 2015).

Background

The Engle framework evolved from a class action filed in 1994 that encompassed an estimated 700,000 Floridians with claims against the major tobacco companies for medical conditions allegedly caused by their addiction to nicotine cigarettes. The class was certified, and after a year-long trial, the jury found for the class on all counts. The Florida Supreme Court subsequently affirmed a decertification of the class, but determined that the jury’s findings would have “res judicata effect” in cases filed by former class members against one or more of the tobacco companies.

Over the years, this “res judicata” directive came to mean, as in the Graham case, that a plaintiff would benefit from extremely advantageous strict liability and negligence instructions informing a jury that the defendants had placed defective cigarettes on the market, and that the defendants had been negligent. In other words, plaintiffs would be relieved from proving the duty and breach elements of their claims, and defendants would be precluded from disputing those elements. Thus, a plaintiff would merely have to show that she had been a member of the decertified class (and thus a beneficiary of the jury’s findings), that addiction to the defendants’ cigarettes was a legal cause of her alleged injuries, and damages. The Graham plaintiff succeeded in this regard.

The tobacco companies argued, inter alia, that federal law preempted the verdict, inasmuch as it was premised on the imposition of common law duties amounting to a ban on their products. They noted that, subject to regulation, Congress had determined to allow the sale of nicotine cigarettes despite the known health risks and addictive properties.

The Court’s Determination

After examining the history and breadth of federal legislation regulating nicotine cigarettes in the United States, the court observed that “Congress has never intended to prohibit consumers from purchasing cigarettes. To the contrary, it has designed ‘a distinct regulatory scheme’ to govern the product’s advertising, labelling, and—most importantly—sale.” Thus, the court found a congressional aim to regulate, not ban, the sale of cigarettes.

In contrast, the court found that the res judicata instructions derived from the Engle litigation amounted to a flat ban on cigarette sales. This is because “[t]he Florida courts have come to interpret the Engle Phase I jury findings to demand an outcome Congress has sought to avoid, namely, the imposition of a duty that was breached every time a cigarette manufacturer placed a cigarette on the market to be sold.” As the court explained, “[the State of Florida] may not enforce a duty, as it has through the Engle jury findings, premised on the theory that all cigarettes are inherently defective and that every cigarette sale is an inherently negligent act.” Accordingly, the court determined that, as framed under the generic findings of the Engle framework, the Graham plaintiff’s strict liability and negligence claims were preempted by federal law.

Graham is a momentous opinion that is likely to engender efforts for further appellate review. The opinion will not affect most lawsuits that were pending in federal court, as the tobacco companies announced in February that they would settle those actions for $100 million. However, if the opinion stands, it may influence the future of thousands of cases pending in Florida state courts. Plainly put, if Florida courts adopt the Eleventh Circuit’s reasoning, plaintiffs will have to establish each element of their affected claims without the advantage of significant legal shortcuts.

The attorneys at Hernandez Lee Martinez have extensive experience handling class actions and products liability litigation. Please contact us to find out how we can help you in your particular situation

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Eleventh Circuit Confirms That An Insurer’s Subjective Determination Is What Matters When Policy Language Requires Proof Of Loss That Is “Satisfactory To The Insurer”

In Fla. Tube Corp. v. MetLife Ins. Co. of Conn, No. 14-10824, 2015 U.S. App. LEXIS 4208 (11th Cir. Mar. 17, 2015) (unpublished), the Eleventh Circuit Court of Appeals considered whether a life insurer was obligated to pay benefits upon its receipt of circumstantial evidence of the insured’s death, despite the fact that the insurer found the evidence to be insufficient given the circumstances surrounding the alleged death. The key issue for determination was whether policy language requiring the insurer to pay benefits upon its receipt of “any other proof satisfactory to [the insurer]” vested it with the necessary measure of discretion to deny the claim.

Background

The insured allegedly died in a plane accident soon after taking off from an airport in the Dominican Republic. The insured was alleged to be the plane’s pilot and sole occupant, and neither the wreckage nor a body were ever found. There was evidence from the insured’s assistant that he took the insured to the airport, saw him board the plane, and heard the insured mention concerns about electrical or battery problems with the plane.

However, there was no evidence of anyone seeing the insured actually fly the plane away. A report from the National Transportation Safety Board merely repeated equivocal information released by authorities in the Dominican Republic, stating that the plane “presumably” collided with coastal waters, its unidentified pilot was “presumed” dead, and the plane was “presumed” destroyed.

The insurer also considered that: (1) the insured’s initial death certificate had a date of death that predated the date of the alleged flight, (2) Dominican Republic authorities nullified a second death certificate due to irregularities in its issuance, and (3) the policy’s benefits were an indispensable part of the insured’s proposed plan for reorganization in his personal bankruptcy proceedings that were pending at the time of the alleged death.

The Policy Language and The Beneficiaries’ Argument

The insurance policy defined “Due Proof of Death” as “a copy of a certified death certificate; a copy of a certified decree of a court of a competent jurisdiction as to the finding of death; a written statement by a medical doctor who attended the deceased; or any other proof satisfactory to us.” Since none of the documents specified in the definition were available, the policy’s beneficiaries argued that the available circumstantial evidence, when viewed under an objective standard, satisfied the “any other proof satisfactory to us” requirement. More specifically, the beneficiaries argued that the language had to be considered under an objective standard, pursuant to which the inquiry would center on whether a reasonable person would find the adduced evidence to be sufficient for a finding of death.

The Court’s Determination

The court rejected the beneficiaries’ argument, noting that the language “any other proof satisfactory to us”—i.e., MetLife—was unambiguous, and that its plain meaning afforded the insurer discretion to decide what it considered to be satisfactory. In this regard, the court drew from ERISA case law, where policies containing similar language are more common. The court did suggest that an insurer’s discretion is not unlimited, observing in a footnote that an insurer may be subject to an implied reasonableness threshold “when presented with evidence that would be almost universally satisfactory.” However, the court noted that the case “did not reach that threshold.”

The Florida Tube opinion is important because it confirms that policy language meant to protect insurers’ subjective claim-handling determinations can be enforced, even if seemingly one-sided, so long as it is found to be unambiguous.

The attorneys at Hernandez Lee Martinez have extensive experience handling insurance coverage disputes and other actions where issues of contract interpretation are paramount. Please contact us to find out how we can help you in your particular situation.

March 31, 2015 - Categories: Legal Developments

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