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Filing # 28060041 E-Filed 06/03/2015 05:13:33 PM
IN THE CIRCUIT COURT OF THE EIGHTEENTH JUDICIAL CIRCUIT
IN AND FOR BREVARD COUNTY, FLORIDA
CIVIL DIVISION
FONTAINE WALLACE as Personal
Representative of the ESTATE OF ROBERT
E. WALLACE,
Plaintiff,
VS. Case No.: 05-2014-CA-052862
R.J. REYNOLDS TOBACCO COMPANY, et
al.,
Defendants.
DEFENDANTS’ OPPOSITION TO PLAINTIFF’S MOTION
AND PROFFER TO PLEAD PUNITIVE DAMAGES AGAINST DEFENDANTS
Defendants Philip Morris USA Inc., R.J. Reynolds Tobacco Company, and Lorillard
Tobacco Company (“Defendants”), hereby oppose Plaintiffs request for leave to amend her
complaint to plead claims for punitive damages.
Plaintiff's request to amend the complaint to assert claims for punitive damages does not
satisfy the requirements for pleading punitive damages set forth in section 768.72, Florida
Statutes, and Florida Rule of Civil Procedure 1.190(f). Moreover, allowing the proposed
amendment would violate Defendants’ rights under the constitutions of the United States and
Florida. Plaintiff has failed to proffer any evidence that the conduct of each Defendant
underlying any of the claims on which she seeks punitive damages was intentional misconduct
that was a legal cause of Mr. Wallace’s alleged injuries, and that the conduct was directed by a
high-ranking official of a Defendant acting with the required mental state. Plaintiff's proffer of
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Case No.: 05-2014-CA-052862
the Engle findings is irrelevant to that inquiry, because the jury in this case may not rely on the
Engle findings in deciding either liability for or the amount of any punitive damages award.
The only other evidence proffered by Plaintiff consists of exhibits and transcripts from
the Engle trial, selected company documents, tobacco advertisements, generic articles discussing
smoking and health, and excerpts from the decision in United States v. Philip Morris Inc., 449 F.
Supp. 2d 1, 938-99 (D.D.C. 2004) (“DOJ”).! This evidence does not provide a reasonable basis
for seeking punitive damages on the fraudulent concealment or conspiracy to conceal claims in
this case, because Plaintiff has proffered no evidence (nor could she) that Mr. Wallace relied on
any statement by a Defendant concealing or omitting material facts not already known to him
regarding the health effects or addictive nature of smoking. Thus, Plaintiff has failed to establish
a causal nexus between any conduct of the Defendants reflected in the evidence she proffered
and Mr. Wallace’s alleged smoking-related injuries.
Plaintiffs motion to amend her complaint to add punitive damages claims on her non-
intentional tort claims must be denied for several additional reasons. Although the Fifth District
has not ruled on the issue, three of the other four district courts of appeal have held that Engle
progeny plaintiffs may not assert claims for punitive damages based on the non-intentional torts
of negligence and strict liability. The First District Court of Appeal decided in Soffer v. R.J.
Reynolds Tobacco Co., 106 So. 3d 456, 460-61 (Fla. 1st DCA 2012), that an Engle progeny
' Plaintiff subsequently attempted to supplement her proffer through a notice of filing her
deposition testimony from April 28 and 29, 2015. See PI.’s Notice of Filing (May 20, 2015).
However, Plaintiff failed to specify the portions of her testimony on which she relies in support
of her motion, and as a result the testimony cannot be considered part of her proffer. See Beverly
Health & Rehab. Servs. v. Meeks, 778 So. 2d 322, 324-25 (Fla. 2d DCA 2000) (approving trial
court’s requirement of “a written summary of the evidentiary proffer, with appropriate page and
line citations to depositions, testimony, and affidavits, to be filed and served in advance of the
hearing [regarding a motion to amend],” to assure that such hearings comply with a defendant's
due process rights and with the spirit and intent of section 768.72) (emphasis added).
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plaintiff, claiming to maintain the action based on the status of the smoker as a member of the
former Engle class, is bound by the failure of the class to timely assert a claim for punitive
damages based on any non-intentional tort theories of recovery in the Engle class action suit.
The Third and Fourth District subsequently adopted the reasoning of Soffer and reached the same
conclusion. See R.J. Reynolds Tobacco Co. v. Ciccone, 123 So. 3d at 616, 617 (Fla. 4th DCA
2013); R.J. Reynolds Tobacco Co. v. Williams, -- So. 3d --, 2014 WL 4344369 (Fla. 3d DCA
Sept. 3, 2014) (“W]e find no basis to support a claim for [punitive] damages on [plaintiffs]
remaining non-intentional tort (negligence and strict liability) claims.” (emphasis added)).
This Court should follow the better-reasoned weight of authority and reach the same result here.”
I TO PROVIDE A REASONABLE BASIS FOR RECOVERY OF PUNITIVE
DAMAGES, PLAINTIFF MUST PROFFER EVIDENCE OF DEFENDANTS’
CONDUCT THAT HAS A CAUSAL NEXUS TO MR. WALLACE’S ALLEGED
SMOKING-RELATED INJURY ON EACH CLAIM FOR WHICH SHE SEEKS
PUNITIVE DAMAGES
Florida law is clear that “no claim for punitive damages shall be permitted unless there is
a reasonable showing by evidence in the record or proffered by the claimant which would
provide a reasonable basis for recovery of such damages.” § 768.72(1), Fla. Stat.; see also Fla.
R. Civ. P. 1.190(f; Wolper Ross Ingham & Co. v. Liedman, 544 So, 2d 307, 308 (Fla. 3d DCA
1989) (plaintiff must “make a showing by proffer or through evidence in the record that some
reasonable basis exists to support recovery of punitive damages before the trial court permits a
pleading requesting such damages”). Defendants have a “substantive legal right not to be subject
to a punitive damages claim . . . until the trial court makes a determination that there is a
reasonable evidentiary basis for recovery of punitive damages.” Globe Newspaper Co. v. King,
658 So. 2d 518, 519 (Fla. 1995); see also Simeon, Inc. v. Cox, 671 So. 2d 158 (Fla. 1996).
> The arguments in this memorandum are made without prejudice to Defendant’s position that
Plaintiff cannot seek punitive damages under any theory for a variety of other reasons.
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Under Florida law and federal and state due process principles, Plaintiff must proffer
evidence showing that each Defendant’s conduct underlying each of the claims on which
Plaintiff seeks punitive damages was intentional misconduct that was a legal cause of Mr.
Wallace’s alleged smoking-related injury and death, and that the conduct was directed by a
high-ranking official of the Defendant acting with the required mental state.’ The legal cause
requirement has long been reflected in Florida’s standard jury instructions. The pertinent
standard instruction states: “If you find for (claimant) and against (defendant), and you also find
that clear and convincing evidence shows that the conduct of (managing agent, primary owner,
or other person whose conduct may warrant punitive damages without proof of a superior’s fault)
was a substantial cause of [loss] [injury] [or] [damage] to (claimant) and that such conduct
warrants punitive damages under the standards I have given you, then in your discretion you may
determine that punitive damages are warranted against (defendant).” Fla. Std. Jury Instr. (Civ.)
PD 1b(2).
Thus, courts in Engle progeny cases have consistently held that a plaintiff seeking
punitive damages must proffer evidence showing conduct of each defendant undertaken with the
requisite mental state that has a causal nexus to the smoker’s alleged injury — and have denied
motions based on proffers that failed to do so. For example, the trial court in Virginia Williams
vy. R.J. Reynolds Tobacco Co., No. 11-26313 CA 02 (Fla. 11th Cir. Ct. Sept. 14, 2012), denied
the plaintiffs motion to assert claims for punitive damages based on strict liability, fraudulent
concealment, conspiracy to conceal, and negligence claims where the plaintiff's proffer did not
establish such a causal nexus. Critically, on the plaintiffs appeal, the Third District affirmed the
3 The Florida Supreme Court has held that punitive damages may be imposed against a
corporation only if the allegedly wrongful conduct was undertaken by someone who is a
“managing agent or holds a policy-making position.” Schropp v. Crown Eurocars, Inc., 654 So.
2d 1158, 1161 (Fla. 1995).
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trial court’s decision with respect to all claims. See Order (Ex. A), aff'd, R.J. Reynolds Tobacco
Co. v. Williams, -- So. 3d --, No. 3D13-2099, 2014 WL 4344369 (Fla. 3d DCA Sept. 3, 2014)
(“We find no merit in Ms. Williams’ cross-appeal of the trial court’s denial of her motion to
assert a claim for punitive damages on her intentional tort claims, and . . . we find no basis to
support a claim for such damages on her remaining non-intentional tort (negligence and strict
liability) claims.”).
Likewise, the plaintiff in Chadwell v. Philip Morris USA Inc. proffered testimony that the
decedent smoker had been exposed to tobacco advertising and had “mentioned the Marlboro
Man being a masculine cigarette.” Order at 2, Chadwell v. Philip Morris USA Inc., No. 10-
17931 CA 31 (Fla. 11th Cir, Ct. June 15, 2012) (Ex. B). Judge Cynamon rejected the contention
that such a statement could provide a reasonable basis for a punitive damages claim, explaining:
“This evidence does not provide a reasonable basis for seeking punitive damages on the
fraudulent concealment or agreement to conceal claims because Plaintiff fails to proffer
sufficient evidence that the decedent relied on any concealment regarding the health effects of
smoking.” /d. (emphasis added), Numerous other courts have reached the same result. See Ex.
C (collecting authority).
The same limitation applies as a matter of due process. The U.S. Supreme Court has
made clear that conduct “independent from the acts upon which liability was premised, may not
serve as the basis for punitive damages.” State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S.
408, 422 (2003) (emphasis added); see also Philip Morris USA v. Williams, 549 U.S. 346, 355
(2007) (punitive damages can only be used to punish a defendant for “the conduct that harmed
the plaintiff’); Pac. Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 19, 21-22 (1991) (requiring “some
understandable relationship” between the defendant’s conduct and plaintiffs alleged injury).
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Federal due process requires that punitive damages may only be awarded to punish a defendant
for the misconduct that actually injured the person who is the subject of the claim for such
damages. See Williams, 549 U.S. at 353-57 (holding that “the Constitution’s Due Process Clause
forbids a State to use a punitive damages award to punish a defendant for injury that it inflicts
upon nonparties,” and that federal constitutional law obligates state courts to protect defendants
against punitive damages awards going beyond the injury caused to the smoker); State Farm,
538 U.S. at 423 (reversing an award of punitive damages based on conduct that bore no relation
to the plaintiff's injury). Thus, due process does not permit punitive damages to be awarded for
conduct to the extent that it causes injury to non-parties. See Williams, 549 U.S. at 349 (holding
that an award of punitive damages based on injury to someone other than the plaintiff “would
amount to a taking of ‘property’ from the defendant without due process”); Smith v. Vining, 407
So, 2d 1048, 1049 (Fla. 3d DCA 1981) (it is fundamental that “punitive damages must bear a
relationship to the fact of injury or invasion of legal right”). Because punitive damages cannot
be awarded to Plaintiff on the basis of conduct other than the intentional fraudulent misconduct
of Defendants that is shown to have been a legal cause of Mr. Wallace’s alleged smoking-related
injury and death, evidence of conduct that harmed others does not provide a reasonable basis to
support recovery of punitive damages in this case.
Il. PLAINTIFF’S PROFFER IN THIS CASE IS LEGALLY INADEQUATE
Plaintiff's proffer in this case consists of (1) the Engle Phase I findings, (2) selected
internal documents and advertisements that have no connection to Mr. Wallace, (3) various
smoking and health articles, and (4) references to the decision in United States v. Philip Morris
Inc., 449 F. Supp. 2d 1, 938-99 (D.D.C. 2004) (“DOJ”). Applying the legal standards set forth
above, this proffer is not sufficient to authorize the pleading of a claim for punitive damages.
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A. Plaintiff’s Proffer Of The Engle Phase I Findings Is Insufficient
To Demonstrate A Reasonable Basis For Recovery Of Punitive Damages
It is now settled that the Engle Phase I findings do not constitute a sufficient evidentiary
basis to support recovery of punitive damages. See Order, Virginia Williams v. R.J. Reynolds
Tobacco Co., No. 11-26313 CA 02 (Fla. 11th Cir. Ct. Sept. 14, 2012) (denying plaintiff's motion
to add punitive damages for strict liability, fraudulent concealment, conspiracy to conceal, and
negligence claims), aff'd, R.J. Reynolds Tobacco Co. v. Williams, -- So. 3d --, No. 3D13-2099,
2014 WL 4344369 (Fla. 3d DCA Sept. 3, 2014). The plaintiff
in Virginia Williams argued that
every Engle progeny plaintiff should be able to seek punitive damages on the fraudulent
concealment and conspiracy to conceal claims -- without any need for a case-specific showing of
a causal nexus between any conduct of Defendants and the smoker’s injury. See Answer
Brief/Initial Brief on Cross-Appeal of Appellee/Cross-Appellant at 73 (Ex. D).* The Third
District rejected that argument and affirmed the denial of the motion to amend. Jd.
Indeed, the Engle Phase I findings may not be considered in determining any punitive
damages issues. Florida courts have held repeatedly that the jury may not consider in any way
the Engle Phase I findings when determining whether to impose punitive damages or in
determining the amount, if any, of such damages.* Because the jury cannot consider the Engle
Phase I findings in determining whether or in what amount (if any) to award punitive damages, it
4 To support this position, the plaintiff's counsel argued that “[t]he Eng/e findings alone should
be sufficient to warrant any Engle progeny plaintiff to seek punitive damages on the concealment
and conspiracy claims.” /d. Crystallizing that position in the reply brief, counsel for the plaintiff
argued that “the Engle record and findings . . . should require leave [to plead punitive damages]
be granted in every Engle progeny case.” Reply Brief on Cross-Appeal at 2, R.J. Reynolds
Tobacco Co. v. Virginia Williams, No. 3D13-2099 (Fla. 3d DCA) (filed July 24, 2014)
(“Virginia Williams Cross-Appeal Reply”) (Ex. E).
5 See, e.g., May 19, 2011 Trial Tr. at 2923, Reese v. R.J. Reynolds Tobacco Co., No. 07-30296
(Fla. 11th Cir. Ct.) (“For the purposes of determining whether Mrs. Reese is entitled to punitive
damages you may not consider in any way the findings regarding R.J. Reynolds’ conduct from
the prior class action lawsuit that I have -- that I described to you earlier.”) (Ex. F).
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necessarily follows that the findings cannot provide the “reasonable basis for recovery of such
damages” required by section 768.72(1) to authorize leave to amend the complaint. Plaintiff
cannot rely upon the Phase I findings to provide a reasonable evidentiary basis for her punitive
damages claims for several reasons.
First, the Engle Phase I jury made its findings under a standard of proof more lenient than
the one required to recover punitive damages. Specifically, because the Phase I findings related
only to the Engle jury’s determination of compensatory liability, they were made under a
“greater weight of the evidence” standard. See Engle Trial Tr. at 37578-79 (Ex. G). However,
punitive damages must be proven under the more rigorous “clear and convincing evidence”
standard. § 768.725, Fla. Stat.; see also Fla. Std. Jury Instr. (Civ.) PD la, 1b(2).
Second, the Engle Phase | findings are wholly unconnected to Mr. Wallace’s particular
smoking history and alleged smoking-related injury. The Engle Phase I jury made no specific
findings with respect to Mr. Wallace. Mr. Wallace did not testify during Phase I of the Engle
case; nor was he deposed in that case. The Phase I jury did not consider or determine whether
Mr. Wallace was injured by Defendants’ conduct, or whether Defendants are liable to Plaintiff.
See Engle, 945 So. 2d at 1267-68. Of course, the Phase I jury could not have done so because, at
the insistence of the plaintiff class, it was not permitted to hear any evidence about Mr. Wallace
or any other individual smoker. Thus, the Engle Phase | findings are wholly unconnected to Mr.
Wallace’s alleged injury, rendering those findings insufficient as a proffer under section 768.72.
Third, allowing Plaintiff to seek punitive damages based on the Engle Phase I findings is
inconsistent with the Florida Supreme Court’s decision to vacate the Phase I jury’s finding that
the defendants’ conduct rose to a level that would permit an award of punitive damages. See
Engle v. Liggett Grp., Inc., 945 So, 2d 1246, 1254-55 (Fla. 2006). Plaintiff cannot rely on
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findings from a prior case that have been vacated on appeal. See, e.g., Ciffo v. Pub. Storage
Megmt., Inc., 622 So, 2d 1053, 1054 (Fla. 4th DCA 1993) (“A judgment which has been reversed
on appeal cannot be the basis of invoking the doctrine of res judicata.”). In vacating the Phase I
finding that the defendants’ conduct rose to a level that would permit an award of punitive
damages, the Florida Supreme Court made clear that the Phase I jury’s findings relating to
compensatory liability, including those afforded partial res judicata effect, did not suffice as a
matter of law to establish a right to recover punitive damages for any Engle class member.
Engle, 945 So, 2d at 1263 (“[T]he Phase I jury did not determine whether the defendants were
liable to anyone.”). Instead, Engle required that any punitive damages award “be based upon the
facts and circumstances of the defendant’s conduct and the harm to the plaintiff.” /d. at 1265.
Fourth, the Phase I findings are insufficient because they do not establish that a
managing agent, executive, or high-ranking official acting with the mental state required for an
award of punitive damages undertook the conduct that resulted in Mr. Wallace’s alleged injury.
See Fla. Std. Jury Instr. (Civ.) PD 15(2); see also Schropp v. Crown Eurocars, Inc., 654 So. 2d
1158 (Fla. 1995). The Phase I jury was not required to find any such facts. All the jury was
required to find -- and all that it found -- was that employees of the defendants (regardless of
their status within the company) engaged in unspecified tortious conduct. That finding cannot
sustain a claim for punitive damages. See Estate of Despain v. Avante Grp., Inc., 900 So. 2d
637, 640-41 (Fla. 5th DCA 2005).
For these reasons, the Engle Phase I findings cannot provide the “reasonable evidentiary
basis” required to support Plaintiff's request for punitive damages.
B Plaintiff Has Failed To Proffer Sufficient Evidence To Support A
Punitive Damages Award On Her Claims For Fraudulent
Concealment And Conspiracy To Fraudulently Conceal
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Under established principles of Florida law, a plaintiff seeking to recover on a claim for
fraud must prove detrimental reliance. As the Florida Supreme Court recently recognized,
“Engle-progeny plaintiffs must certainly prove detrimental reliance in order to prevail on their
fraudulent concealment claims.” Hess v. Philip Morris USA, Inc., -- So. 3d --, 2015 WL
1472319, at *8 (Fla. Apr. 2, 2015), reh’g pending on other grounds; see also, e.g., Humana, Inc.
v. Castillo, 728 So, 2d 261, 265 (Fla. 2d DCA 1999) (“Florida law imposes a reliance
requirement in an omissions case, which cannot be satisfied by assumptions.”). Moreover, under
Florida law, a plaintiff cannot establish reliance through conjecture or speculation that the
individual was affected merely as a member of the public at large. See, e.g., Humana, Inc. v.
Castillo, 728 So. 2d at 265.° Thus, under Florida law, Plaintiff is required to demonstrate a
causal connection between Defendants’ conduct and Mr. Wallace’s misapprehension to prevail
on her fraudulent concealment claim. See, e.g., id. at 265 (“Ifa plaintiff claims to be misled, but
cannot demonstrate a causal connection between the defendant’s conduct and the plaintiff's
misapprehension, the plaintiff cannot recover”).
1 Plaintiff’s Proffer Is Insufficient To Provide A Reasonable
Evidentiary Basis For Recovery Of Punitive Damages
Plaintiff's proffer fails to demonstrate a reasonable evidentiary basis for recovery of
punitive damages on her fraudulent concealment and conspiracy claims, because Plaintiff has not
§ Morgan v. W.R. Grace & Co., 779 So. 2d 503, 506 (Fla. 2d DCA 2000) (plaintiff could not
prove reliance by showing that defendants created “various documents aimed at the general
public . . . [that] lulled the . . . public, including her, into a false sense of security about the safety
of such reclaimed land”); Morgan v. Canaveral Port Auth., 202 So. 2d 884, 887 (Fla. 4th DCA
1967) (reliance must be proven, and “[i]t cannot be assumed that the appellants relied to their
detriment upon any act or omission on the part of appellees”); Palmas Y Bambu, S.A. v. E.1.
DuPont de Nemours & Co., 881 So, 2d 565, 573 (Fla. 3d DCA 2004) (holding that plaintiff
seeking recovery for fraud under the Florida racketeering statute cannot “relax the reliance
requirement” by alleging that defendant’s fraud affected the “body of public information,” and
citing with approval a ruling that “reliance cannot be presumed due to a defendant’s subjection
of ‘the whole market’ to deceptive advertising”).
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proffered any evidence of Mr. Wallace’s detrimental reliance on a statement by a Defendant
concealing or omitting material information not already known to him regarding the health
effects or addictive nature of smoking, or any evidence demonstrating a causal nexus between
the alleged misconduct of a Defendant that forms the basis of her fraudulent concealment and
conspiracy claims and Mr. Wallace’s alleged smoking-related injuries.
Plaintiff has identified no statement that Mr. Wallace allegedly relied upon. With
nothing in the factual record to support a finding that Mr. Wallace relied on any statement by any
Defendant that was misleading because of any omitted or concealed information, which is an
essential element of her fraud claim, Plaintiff predicates her motion to amend on internal
company documents and advertisements. But these materials likewise have no causal nexus to
Mr. Wallace’s alleged injury. For example, Plaintiff proffers a number of internal company
documents that discuss everything from cigarette design to marketing research to the health risks
of smoking. Yet Plaintiff provides no evidence that Mr. Wallace ever saw any of these internal
documents, let alone that he relied on any of them (or a failure to disclose information in them).
Similarly, Plaintiff proffers a collection of advertisements, but fails to proffer any evidence from
which the jury could find that Mr. Wallace ever saw or heard any of the proffered
advertisements, let alone that he relied on them in his smoking behavior.
Plaintiffs repeated references to Judge Kessler’s findings in the DOJ decision also do not
provide a reasonable basis for recovery of punitive damages. The DOJ decision did not address
the claims of any individual smoker. Rather, DOJ was a federal RICO action brought by the
U.S. government against several defendants (including Defendants here) seeking injunctive relief
to “prevent and restrain” the possibility of future RICO violations. 449 F. Supp. 2d at 27. That
litigation cannot possibly provide the requisite evidence of detrimental reliance by Mr. Wallace.
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2 Plaintiff Cannot Alter This Result By Relying On Martin
Plaintiff may contend that the First District Court of Appeal’s decision in R.J. Reynolds
Tobacco Co. v. Martin, 53 So. 3d 1060 (Fla. Ist DCA 2010), alters the standard for reliance in
this case. In Martin, the First District held, based on a post-trial review of the record evidence
in that case, that for the purposes of a fraudulent concealment claim for compensatory damages,
the jury could infer the smoker’s reliance from evidence of what the court characterized as
“pervasive misleading advertising campaigns” and “the false controversy created by the tobacco
industry . . . aimed at creating doubt among smokers that cigarettes were hazardous to health.”
Id. at 1069-70.’ Martin is not applicable, much less binding, here for several reasons.
First, Martin has no bearing on whether Plaintiff has demonstrated a reasonable basis for
recovery of punitive damages on her fraudulent concealment and conspiracy claims. In Martin,
the First District held only that, for the purposes of a fraudulent concealment claim for
compensatory damages, the jury there was permitted to infer the smoker’s reliance. Martin, 53
So, 3d at 1069-70. Such a claim is governed by a “greater weight of the evidence” standard of
proof. See, e.g., Wieczoreck v. H&H Builders, Inc., 475 So. 2d 227, 228 (Fla. 1985); Passaat,
Ltd. v. Better, 654 So, 2d 980, 981 (Fla. 4th DCA 1995). Florida law requires that the question
of whether punitive damages are warranted must be determined based on a much higher “clear
and convincing evidence” standard of proof. See, e.g., § 768.725, Fla. Stat; see also Fla. Std.
Jury Instr. (Civ.) PD 1a, 1b(2). Plaintiff has no authority to support the proposition that an
inference of reliance of the type discussed in Martin can suffice to demonstrate culpability for
punitive damages under a clear and convincing evidence standard of proof. Indeed, it is
inconceivable that an inference of reliance would be compatible with that higher standard.
7 See also Philip Morris USA Inc. v. Putney, 117 So. 3d 798 (Fla. 4th DCA 2013).
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Moreover, the mere fact that there were punitive damages claims at issue in Martin does not
establish that an inference of reliance can be used to support Plaintiff's punitive damages claims.
Furthermore, it is significant that the Martin court only ruled that the verdict imposing
compensatory damages liability could be upheld on the basis that the jury could have inferred the
deceased smoker’s reliance from record evidence presented at trial in that case. When the
Martin court found that the record in that case contained sufficient evidence to support an
inference that the smoker relied on the tobacco company’s advertising, it had the benefit of
viewing the entire body of evidence presented to the jury at trial. But nothing in Martin
authorizes a trial court to make such a determination as to the sufficiency of the evidence to
support an inference of reliance based on a minimal evidentiary proffer made before trial.
Second, any attempt to apply the Martin inference as an essential link to facilitate the
pleading of a punitive damages claim under section 768.72 and rule 1.190(f) requires not merely
the use of a single inference of reliance, but a succession of dependent inferences that stretch
from the premise that Mr. Wallace was exposed to the advertisements to the conclusion that he
contracted a smoking-related disease, which would not have occurred but for the fact that he read
and relied on those advertisements. As the Florida Supreme Court declared long ago, however,
“if'a party to a civil action depends upon the inferences to be drawn from circumstantial evidence
as proof of one fact, it cannot construct a further inference upon the initial inference in order to
establish a further fact.” Nielsen v. City of Sarasota, 117 So. 2d 731, 733 (Fla. 1960).8 “The rule
5 Courts have recognized an exception to this rule, but the exception applies only when “the
original, basic inference was established to the exclusion of all other reasonable inferences.”
Nielsen v. City of Sarasota, 117 So, 2d 731, 733 (Fla. 1960) (emphasis added); see also Slitor v.
Elias, 544 So. 2d 255, 257-58 (Fla. 2d DCA 1989) (in a case where a party attempted to stack
three inferences, holding that “the critical issue is whether the [second inference] can be elevated
to the status of a fact to support the [third and] final inference”). This exception clearly does not
apply to the series of inferences that the Court would be required to stack for purposes of
Plaintiff's motion for leave to plead punitive damages claims on the fraud-based torts.
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that an inference may not be stacked on another inference is designed to protect litigants from
verdicts based upon conjecture and speculation.” Stanley v. Marceaux, 991 So. 2d 938, 940 (Fla.
4th DCA 2008) (citation omitted). Thus, Plaintiffs attempt to demonstrate reliance by
impermissibly stacking inferences is insufficient to support her claims for punitive damages on
the fraud-based torts. And to the extent that other courts have ruled that the Martin inference
could be extended for that purpose, Defendants respectfully submit that such rulings go too far.
Third, the decision in Martin did not (and could not) eliminate the federal due process
requirement that punitive damages may only be awarded to punish conduct that actually caused
the injury to the smoker seeking such damages. See Williams, 549 U.S. at 353-57; State Farm,
538 U.S. at 423. To the contrary, the Martin court never addressed the issue of whether an
inference of reliance satisfies the federal due process requirement of proof of a causal nexus.
This limitation independently requires a causal nexus between the conduct to be punished and
the injury allegedly suffered by the smoker. Williams, 549 U.S. at 349 (holding that an award of
punitive damages based on injury to someone other than the plaintiff “would amount to a taking
of ‘property’ from the defendant without due process”),
Consequently, in addition to protecting Defendants from baseless punitive damages
claims, the requirements of section 768.72 and rule 1.190 provide an early protection against
violations of Defendants’ rights under federal constitutional law. Under section 768.72, a
plaintiff may not even assert a claim for punitive damages without showing a “reasonable
evidentiary basis for recovery” of such damages. Because only conduct that caused Mr.
Wallace’s alleged smoking-related injury can provide a constitutional basis for punitive damages
here, Plaintiff must make a proffer that establishes a causal nexus between Defendants’ allegedly
punishable conduct for Plaintiff's fraud-based claims and Mr. Wallace’s alleged injuries.
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The foregoing analysis demonstrates that the inference of reliance adopted by the First
District in Martin cannot properly be applied in this pretrial context to satisfy the requirement
that a plaintiff must make a reasonable showing that punitive damages are recoverable by
proffering evidence from which the jury could find that Defendants’ punishable conduct caused
Mr. Wallace’s alleged smoking-related injury. Plaintiff has failed to proffer any evidence of any
detrimental reliance by Mr. Wallace on any misleading statement allegedly made by a Defendant
here. Because proof of fraud must be based on such evidence of individualized reliance — not on
compounded assumptions that all members of the public who smoked cigarettes were induced to
do so by Defendants’ advertising, and that any resulting injury those smokers suffered was
caused by their reliance on that advertising — Plaintiff's request for leave to amend her complaint
to plead punitive damages claims should be denied.
Til. PLAINTIFF’S MOTION MUST BE DENIED TO THE EXTENT THAT SHE
SEEKS PUNITIVE DAMAGES ON HER NON-INTENTIONAL TORT CLAIMS
Plaintiff's motion must be denied to the extent that she seeks punitive damages on her
non-intentional tort counts for an independent reason. In Soffer, the First District considered
the precise issue of whether an Engle progeny plaintiff may assert punitive damages claims
for strict liability and negligence despite the failure of the Engle class to timely seek punitive
damages on those theories of recovery. See Soffer, 106 So. 3d at 457. After reviewing the
history and unique posture of Engle, the First District held that plaintiffs in Engle progeny
cases may not assert punitive damage claims other than those that were “allowed in Engle.”
Id. at 461. The court specifically ruled that “[p]rogeny plaintiffs . .. may not assert such
claims based on strict liability and negligence theories.” /d. The court in Soffer accepted the
proposition that progeny plaintiffs “cannot unilaterally accept the enormous benefits of
equitable tolling and the res judicata effect of Phase I findings without accepting the
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limitations, express and implied, in that decision” — in effect, that they must “take the bitter
with the sweet.” Soffer, 106 So.3d at 459. The First District concluded that Engle progeny
plaintiffs may seek punitive damages on their fraudulent concealment and conspiracy claims,
but not their non-intentional tort claims, which would “provide an unjustifiable and
potentially unintended windfall by expanding Engle beyond its existing parameters.” Jd. at
461; see also id. at 458 (recognizing that “punitive damages for the Engle Class were limited
to only the two intentional tort counts”).
The Third and Fourth District Courts of Appeal have reached the same result. In
Cicone, 123 So. 3d at 616, the Fourth District adopted and applied the First District’s
decision in Soffer to hold that an Engle progeny plaintiff, claiming a right to maintain the
action based on the status of the smoker as a member of the former Engle class, cannot seek
punitive damages on her non-intentional tort claims, including gross negligence. The Third
District has recently reached the same conclusion. Williams, -- So. 3d --, No. 3D13-2099,
2014 WL 4344369, at *1 (“/W]e find no basis to support a claim for [punitive] damages on
[plaintiff's] remaining non-intentional tort (negligence and strict liability) claims.”
(emphasis added)). The same result should be reached here.
Plaintiff may contend that the Second District Court of Appeal’s decision in Philip
Morris USA Inc. v. Hallgren, 124 So. 3d 350 (Fla. 2d DCA 2013), supports a different result.
It does not for several reasons.
As an initial matter, in reaching its decision, the Hallgren court placed great weight
on the proposition that punitive damages claims are not a separate causation of action, but
“merely a remedy that must be asserted in conjunction with a substantive claim.” Jd. at *4.
This argument, however, misapprehends the law on equitable tolling, as applied in Soffer and
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Ciccone. Under settled principles of Florida law, equitable tolling applies only where the
claims brought by the former class member are “identical” to those pursued by the class
itself. See Hromyak v. Tyco International Ltd., 942 So. 2d 1022, 1023 (Fla. 4th DCA 2006)
(strict identity between individual and former class claims is an “essential ingredient” of
equitable tolling); see also Raie v. Cheminova, Inc., 336 F.3d 1278, 1283 (11th Cir. 2003)
(denying equitable tolling because plaintiffs could not “demonstrate that their wrongful death
action was included in the [original] class action”). Here, strict liability and negligence
claims that include demands for punitive damages are not “identical” to the compensatory
strict liability and negligence claims that were permissibly asserted in Engle, even if punitive
damages are conceived of as a remedy as opposed to a separate “claim.” Indeed, such claims
are so distinct and different in Florida that a plaintiff must seek leave of court to amend the
complaint before seeking punitive damages for non-intentional torts. See § 768.72(1), Fla.
Stat.; Globe Newspaper Co. v. King, 658 So. 2d 518, 519 (Fla. 1995). Accordingly, those
claims are not entitled to equitable tolling, and the courts in Soffer, Ciccone, and Williams
correctly held that Engle progeny plaintiffs are precluded from asserting such claims.
The Second District’s conclusion that negligence and strict liability claims should be
deemed “identical” to those in Engle, even though they seek vastly broader remedies, is
inconsistent with both the reasoning of Hromyak and the purpose of equitable tolling. As the
court in Hromyak explained, a plaintiff with different claims is not entitled to the benefit of
tolling because “[i]f he was not a member of the class, he could derive no benefit from its
pendency,” and “if he had been a member, his interests would have been asserted in that
litigation.” 942 So. 2d at 1023.
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The same logic applies with equal force here: Plaintiff claims a right to maintain this
action, which would otherwise have been extinguished by the statute of limitations, based on.
her claim that Mr. Wallace was an Engle class member, thereby entitling her to the benefit of
the equitable tolling of limitations and the one-year savings period provided by the Florida
Supreme Court in Engle. To the extent that Plaintiff's action is dependent on Mr. Wallace’s
alleged status as an Engle class member, her interests were fully represented when class
counsel decided which claims to assert and whether to include a demand for punitive
damages in those claims. If the Florida Supreme Court had not decertified Engle, Plaintiffs
demand for punitive damages on negligence and strict liability would have unquestionably
been rejected — the class’s demand for the same relief failed in Phase II-B of the Eng/e trial.
That fact alone is dispositive, because equitable tolling is intended to prevent the
decertification of the class from imposing unfair hardship on plaintiffs. It is not a vehicle for
Plaintiff to obtain an unfair windfall, by placing her in a better position than she would have
been prior to decertification. The Second District cited no authority to the contrary, and the
fact that punitive damages can be conceived of as a remedy does not alter this conclusion.
Moreover, the Hallgren court’s conclusion that the defendants would not be
prejudiced by allowing Plaintiff to assert new claims for punitive damages is likewise
misplaced. Here, the prejudice is clear. When the Engle class expressly limited its punitive
damages demand to its intentional tort claims, Defendants assessed their exposure and
planned their defenses to those claims accordingly. Yet now, Engle progeny plaintiffs seek
to expand their punitive damages claims to include non-intentional tort claims, which could
increase Defendants’ exposure to potential punitive damages awards several times over. This
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vast expansion in potential liability — occurring decades after the conduct at issue and 19
years after Engle was filed — is plainly prejudicial to Defendants.
Accordingly, Plaintiff's motion for leave to plead a request for punitive damages on
her non-intentional tort claims should be denied, because she is precluded from recovering
punitive damages on those claims as a matter of law.
CONCLUSION
For the reasons set forth above, the Court should deny Plaintiff's Motion to Plead
Punitive Damages Against Defendants.
Respectfully submitted,
/s/ Ryan B. Witte
Mark J. Heise, E
Preview
Filing # 28060041 E-Filed 06/03/2015 05:13:33 PM IN THE CIRCUIT COURT OF THE EIGHTEENTH JUDICIAL CIRCUIT IN AND FOR BREVARD COUNTY, FLORIDA CIVIL DIVISION FONTAINE WALLACE as Personal Representative of the ESTATE OF ROBERT E. WALLACE, Plaintiff, VS. Case No.: 05-2014-CA-052862 R.J. REYNOLDS TOBACCO COMPANY, et al., Defendants. DEFENDANTS’ OPPOSITION TO PLAINTIFF’S MOTION AND PROFFER TO PLEAD PUNITIVE DAMAGES AGAINST DEFENDANTS Defendants Philip Morris USA Inc., R.J. Reynolds Tobacco Company, and Lorillard Tobacco Company (“Defendants”), hereby oppose Plaintiffs request for leave to amend her complaint to plead claims for punitive damages. Plaintiff's request to amend the complaint to assert claims for punitive damages does not satisfy the requirements for pleading punitive damages set forth in section 768.72, Florida Statutes, and Florida Rule of Civil Procedure 1.190(f). Moreover, allowing the proposed amendment would violate Defendants’ rights under the constitutions of the United States and Florida. Plaintiff has failed to proffer any evidence that the conduct of each Defendant underlying any of the claims on which she seeks punitive damages was intentional misconduct that was a legal cause of Mr. Wallace’s alleged injuries, and that the conduct was directed by a high-ranking official of a Defendant acting with the required mental state. Plaintiff's proffer of Filing 28060041 F WALLACE VS R J REYNOLDS. 05-2014-CA-052862-XXXX-XX Case No.: 05-2014-CA-052862 the Engle findings is irrelevant to that inquiry, because the jury in this case may not rely on the Engle findings in deciding either liability for or the amount of any punitive damages award. The only other evidence proffered by Plaintiff consists of exhibits and transcripts from the Engle trial, selected company documents, tobacco advertisements, generic articles discussing smoking and health, and excerpts from the decision in United States v. Philip Morris Inc., 449 F. Supp. 2d 1, 938-99 (D.D.C. 2004) (“DOJ”).! This evidence does not provide a reasonable basis for seeking punitive damages on the fraudulent concealment or conspiracy to conceal claims in this case, because Plaintiff has proffered no evidence (nor could she) that Mr. Wallace relied on any statement by a Defendant concealing or omitting material facts not already known to him regarding the health effects or addictive nature of smoking. Thus, Plaintiff has failed to establish a causal nexus between any conduct of the Defendants reflected in the evidence she proffered and Mr. Wallace’s alleged smoking-related injuries. Plaintiffs motion to amend her complaint to add punitive damages claims on her non- intentional tort claims must be denied for several additional reasons. Although the Fifth District has not ruled on the issue, three of the other four district courts of appeal have held that Engle progeny plaintiffs may not assert claims for punitive damages based on the non-intentional torts of negligence and strict liability. The First District Court of Appeal decided in Soffer v. R.J. Reynolds Tobacco Co., 106 So. 3d 456, 460-61 (Fla. 1st DCA 2012), that an Engle progeny ' Plaintiff subsequently attempted to supplement her proffer through a notice of filing her deposition testimony from April 28 and 29, 2015. See PI.’s Notice of Filing (May 20, 2015). However, Plaintiff failed to specify the portions of her testimony on which she relies in support of her motion, and as a result the testimony cannot be considered part of her proffer. See Beverly Health & Rehab. Servs. v. Meeks, 778 So. 2d 322, 324-25 (Fla. 2d DCA 2000) (approving trial court’s requirement of “a written summary of the evidentiary proffer, with appropriate page and line citations to depositions, testimony, and affidavits, to be filed and served in advance of the hearing [regarding a motion to amend],” to assure that such hearings comply with a defendant's due process rights and with the spirit and intent of section 768.72) (emphasis added). 2 Filing 28060041 F WALLACE VS R J REYNOLDS. 05-2014-CA-052862-XXXX-XX Case No.: 05-2014-CA-052862 plaintiff, claiming to maintain the action based on the status of the smoker as a member of the former Engle class, is bound by the failure of the class to timely assert a claim for punitive damages based on any non-intentional tort theories of recovery in the Engle class action suit. The Third and Fourth District subsequently adopted the reasoning of Soffer and reached the same conclusion. See R.J. Reynolds Tobacco Co. v. Ciccone, 123 So. 3d at 616, 617 (Fla. 4th DCA 2013); R.J. Reynolds Tobacco Co. v. Williams, -- So. 3d --, 2014 WL 4344369 (Fla. 3d DCA Sept. 3, 2014) (“W]e find no basis to support a claim for [punitive] damages on [plaintiffs] remaining non-intentional tort (negligence and strict liability) claims.” (emphasis added)). This Court should follow the better-reasoned weight of authority and reach the same result here.” I TO PROVIDE A REASONABLE BASIS FOR RECOVERY OF PUNITIVE DAMAGES, PLAINTIFF MUST PROFFER EVIDENCE OF DEFENDANTS’ CONDUCT THAT HAS A CAUSAL NEXUS TO MR. WALLACE’S ALLEGED SMOKING-RELATED INJURY ON EACH CLAIM FOR WHICH SHE SEEKS PUNITIVE DAMAGES Florida law is clear that “no claim for punitive damages shall be permitted unless there is a reasonable showing by evidence in the record or proffered by the claimant which would provide a reasonable basis for recovery of such damages.” § 768.72(1), Fla. Stat.; see also Fla. R. Civ. P. 1.190(f; Wolper Ross Ingham & Co. v. Liedman, 544 So, 2d 307, 308 (Fla. 3d DCA 1989) (plaintiff must “make a showing by proffer or through evidence in the record that some reasonable basis exists to support recovery of punitive damages before the trial court permits a pleading requesting such damages”). Defendants have a “substantive legal right not to be subject to a punitive damages claim . . . until the trial court makes a determination that there is a reasonable evidentiary basis for recovery of punitive damages.” Globe Newspaper Co. v. King, 658 So. 2d 518, 519 (Fla. 1995); see also Simeon, Inc. v. Cox, 671 So. 2d 158 (Fla. 1996). > The arguments in this memorandum are made without prejudice to Defendant’s position that Plaintiff cannot seek punitive damages under any theory for a variety of other reasons. 3 Filing 28060041 F WALLACE VS R J REYNOLDS. 05-2014-CA-052862-XXXX-XX Case No.: 05-2014-CA-052862 Under Florida law and federal and state due process principles, Plaintiff must proffer evidence showing that each Defendant’s conduct underlying each of the claims on which Plaintiff seeks punitive damages was intentional misconduct that was a legal cause of Mr. Wallace’s alleged smoking-related injury and death, and that the conduct was directed by a high-ranking official of the Defendant acting with the required mental state.’ The legal cause requirement has long been reflected in Florida’s standard jury instructions. The pertinent standard instruction states: “If you find for (claimant) and against (defendant), and you also find that clear and convincing evidence shows that the conduct of (managing agent, primary owner, or other person whose conduct may warrant punitive damages without proof of a superior’s fault) was a substantial cause of [loss] [injury] [or] [damage] to (claimant) and that such conduct warrants punitive damages under the standards I have given you, then in your discretion you may determine that punitive damages are warranted against (defendant).” Fla. Std. Jury Instr. (Civ.) PD 1b(2). Thus, courts in Engle progeny cases have consistently held that a plaintiff seeking punitive damages must proffer evidence showing conduct of each defendant undertaken with the requisite mental state that has a causal nexus to the smoker’s alleged injury — and have denied motions based on proffers that failed to do so. For example, the trial court in Virginia Williams vy. R.J. Reynolds Tobacco Co., No. 11-26313 CA 02 (Fla. 11th Cir. Ct. Sept. 14, 2012), denied the plaintiffs motion to assert claims for punitive damages based on strict liability, fraudulent concealment, conspiracy to conceal, and negligence claims where the plaintiff's proffer did not establish such a causal nexus. Critically, on the plaintiffs appeal, the Third District affirmed the 3 The Florida Supreme Court has held that punitive damages may be imposed against a corporation only if the allegedly wrongful conduct was undertaken by someone who is a “managing agent or holds a policy-making position.” Schropp v. Crown Eurocars, Inc., 654 So. 2d 1158, 1161 (Fla. 1995). 4 Filing 28060041 F WALLACE VS R J REYNOLDS. 05-2014-CA-052862-XXXX-XX Case No.: 05-2014-CA-052862 trial court’s decision with respect to all claims. See Order (Ex. A), aff'd, R.J. Reynolds Tobacco Co. v. Williams, -- So. 3d --, No. 3D13-2099, 2014 WL 4344369 (Fla. 3d DCA Sept. 3, 2014) (“We find no merit in Ms. Williams’ cross-appeal of the trial court’s denial of her motion to assert a claim for punitive damages on her intentional tort claims, and . . . we find no basis to support a claim for such damages on her remaining non-intentional tort (negligence and strict liability) claims.”). Likewise, the plaintiff in Chadwell v. Philip Morris USA Inc. proffered testimony that the decedent smoker had been exposed to tobacco advertising and had “mentioned the Marlboro Man being a masculine cigarette.” Order at 2, Chadwell v. Philip Morris USA Inc., No. 10- 17931 CA 31 (Fla. 11th Cir, Ct. June 15, 2012) (Ex. B). Judge Cynamon rejected the contention that such a statement could provide a reasonable basis for a punitive damages claim, explaining: “This evidence does not provide a reasonable basis for seeking punitive damages on the fraudulent concealment or agreement to conceal claims because Plaintiff fails to proffer sufficient evidence that the decedent relied on any concealment regarding the health effects of smoking.” /d. (emphasis added), Numerous other courts have reached the same result. See Ex. C (collecting authority). The same limitation applies as a matter of due process. The U.S. Supreme Court has made clear that conduct “independent from the acts upon which liability was premised, may not serve as the basis for punitive damages.” State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 422 (2003) (emphasis added); see also Philip Morris USA v. Williams, 549 U.S. 346, 355 (2007) (punitive damages can only be used to punish a defendant for “the conduct that harmed the plaintiff’); Pac. Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 19, 21-22 (1991) (requiring “some understandable relationship” between the defendant’s conduct and plaintiffs alleged injury). 5 Filing 28060041 F WALLACE VS R J REYNOLDS. 05-2014-CA-052862-XXXX-XX Case No.: 05-2014-CA-052862 Federal due process requires that punitive damages may only be awarded to punish a defendant for the misconduct that actually injured the person who is the subject of the claim for such damages. See Williams, 549 U.S. at 353-57 (holding that “the Constitution’s Due Process Clause forbids a State to use a punitive damages award to punish a defendant for injury that it inflicts upon nonparties,” and that federal constitutional law obligates state courts to protect defendants against punitive damages awards going beyond the injury caused to the smoker); State Farm, 538 U.S. at 423 (reversing an award of punitive damages based on conduct that bore no relation to the plaintiff's injury). Thus, due process does not permit punitive damages to be awarded for conduct to the extent that it causes injury to non-parties. See Williams, 549 U.S. at 349 (holding that an award of punitive damages based on injury to someone other than the plaintiff “would amount to a taking of ‘property’ from the defendant without due process”); Smith v. Vining, 407 So, 2d 1048, 1049 (Fla. 3d DCA 1981) (it is fundamental that “punitive damages must bear a relationship to the fact of injury or invasion of legal right”). Because punitive damages cannot be awarded to Plaintiff on the basis of conduct other than the intentional fraudulent misconduct of Defendants that is shown to have been a legal cause of Mr. Wallace’s alleged smoking-related injury and death, evidence of conduct that harmed others does not provide a reasonable basis to support recovery of punitive damages in this case. Il. PLAINTIFF’S PROFFER IN THIS CASE IS LEGALLY INADEQUATE Plaintiff's proffer in this case consists of (1) the Engle Phase I findings, (2) selected internal documents and advertisements that have no connection to Mr. Wallace, (3) various smoking and health articles, and (4) references to the decision in United States v. Philip Morris Inc., 449 F. Supp. 2d 1, 938-99 (D.D.C. 2004) (“DOJ”). Applying the legal standards set forth above, this proffer is not sufficient to authorize the pleading of a claim for punitive damages. 6 Filing 28060041 F WALLACE VS R J REYNOLDS. 05-2014-CA-052862-XXXX-XX Case No.: 05-2014-CA-052862 A. Plaintiff’s Proffer Of The Engle Phase I Findings Is Insufficient To Demonstrate A Reasonable Basis For Recovery Of Punitive Damages It is now settled that the Engle Phase I findings do not constitute a sufficient evidentiary basis to support recovery of punitive damages. See Order, Virginia Williams v. R.J. Reynolds Tobacco Co., No. 11-26313 CA 02 (Fla. 11th Cir. Ct. Sept. 14, 2012) (denying plaintiff's motion to add punitive damages for strict liability, fraudulent concealment, conspiracy to conceal, and negligence claims), aff'd, R.J. Reynolds Tobacco Co. v. Williams, -- So. 3d --, No. 3D13-2099, 2014 WL 4344369 (Fla. 3d DCA Sept. 3, 2014). The plaintiff in Virginia Williams argued that every Engle progeny plaintiff should be able to seek punitive damages on the fraudulent concealment and conspiracy to conceal claims -- without any need for a case-specific showing of a causal nexus between any conduct of Defendants and the smoker’s injury. See Answer Brief/Initial Brief on Cross-Appeal of Appellee/Cross-Appellant at 73 (Ex. D).* The Third District rejected that argument and affirmed the denial of the motion to amend. Jd. Indeed, the Engle Phase I findings may not be considered in determining any punitive damages issues. Florida courts have held repeatedly that the jury may not consider in any way the Engle Phase I findings when determining whether to impose punitive damages or in determining the amount, if any, of such damages.* Because the jury cannot consider the Engle Phase I findings in determining whether or in what amount (if any) to award punitive damages, it 4 To support this position, the plaintiff's counsel argued that “[t]he Eng/e findings alone should be sufficient to warrant any Engle progeny plaintiff to seek punitive damages on the concealment and conspiracy claims.” /d. Crystallizing that position in the reply brief, counsel for the plaintiff argued that “the Engle record and findings . . . should require leave [to plead punitive damages] be granted in every Engle progeny case.” Reply Brief on Cross-Appeal at 2, R.J. Reynolds Tobacco Co. v. Virginia Williams, No. 3D13-2099 (Fla. 3d DCA) (filed July 24, 2014) (“Virginia Williams Cross-Appeal Reply”) (Ex. E). 5 See, e.g., May 19, 2011 Trial Tr. at 2923, Reese v. R.J. Reynolds Tobacco Co., No. 07-30296 (Fla. 11th Cir. Ct.) (“For the purposes of determining whether Mrs. Reese is entitled to punitive damages you may not consider in any way the findings regarding R.J. Reynolds’ conduct from the prior class action lawsuit that I have -- that I described to you earlier.”) (Ex. F). 7 Filing 28060041 F WALLACE VS R J REYNOLDS. 05-2014-CA-052862-XXXX-XX Case No.: 05-2014-CA-052862 necessarily follows that the findings cannot provide the “reasonable basis for recovery of such damages” required by section 768.72(1) to authorize leave to amend the complaint. Plaintiff cannot rely upon the Phase I findings to provide a reasonable evidentiary basis for her punitive damages claims for several reasons. First, the Engle Phase I jury made its findings under a standard of proof more lenient than the one required to recover punitive damages. Specifically, because the Phase I findings related only to the Engle jury’s determination of compensatory liability, they were made under a “greater weight of the evidence” standard. See Engle Trial Tr. at 37578-79 (Ex. G). However, punitive damages must be proven under the more rigorous “clear and convincing evidence” standard. § 768.725, Fla. Stat.; see also Fla. Std. Jury Instr. (Civ.) PD la, 1b(2). Second, the Engle Phase | findings are wholly unconnected to Mr. Wallace’s particular smoking history and alleged smoking-related injury. The Engle Phase I jury made no specific findings with respect to Mr. Wallace. Mr. Wallace did not testify during Phase I of the Engle case; nor was he deposed in that case. The Phase I jury did not consider or determine whether Mr. Wallace was injured by Defendants’ conduct, or whether Defendants are liable to Plaintiff. See Engle, 945 So. 2d at 1267-68. Of course, the Phase I jury could not have done so because, at the insistence of the plaintiff class, it was not permitted to hear any evidence about Mr. Wallace or any other individual smoker. Thus, the Engle Phase | findings are wholly unconnected to Mr. Wallace’s alleged injury, rendering those findings insufficient as a proffer under section 768.72. Third, allowing Plaintiff to seek punitive damages based on the Engle Phase I findings is inconsistent with the Florida Supreme Court’s decision to vacate the Phase I jury’s finding that the defendants’ conduct rose to a level that would permit an award of punitive damages. See Engle v. Liggett Grp., Inc., 945 So, 2d 1246, 1254-55 (Fla. 2006). Plaintiff cannot rely on 8 Filing 28060041 F WALLACE VS R J REYNOLDS. 05-2014-CA-052862-XXXX-XX Case No.: 05-2014-CA-052862 findings from a prior case that have been vacated on appeal. See, e.g., Ciffo v. Pub. Storage Megmt., Inc., 622 So, 2d 1053, 1054 (Fla. 4th DCA 1993) (“A judgment which has been reversed on appeal cannot be the basis of invoking the doctrine of res judicata.”). In vacating the Phase I finding that the defendants’ conduct rose to a level that would permit an award of punitive damages, the Florida Supreme Court made clear that the Phase I jury’s findings relating to compensatory liability, including those afforded partial res judicata effect, did not suffice as a matter of law to establish a right to recover punitive damages for any Engle class member. Engle, 945 So, 2d at 1263 (“[T]he Phase I jury did not determine whether the defendants were liable to anyone.”). Instead, Engle required that any punitive damages award “be based upon the facts and circumstances of the defendant’s conduct and the harm to the plaintiff.” /d. at 1265. Fourth, the Phase I findings are insufficient because they do not establish that a managing agent, executive, or high-ranking official acting with the mental state required for an award of punitive damages undertook the conduct that resulted in Mr. Wallace’s alleged injury. See Fla. Std. Jury Instr. (Civ.) PD 15(2); see also Schropp v. Crown Eurocars, Inc., 654 So. 2d 1158 (Fla. 1995). The Phase I jury was not required to find any such facts. All the jury was required to find -- and all that it found -- was that employees of the defendants (regardless of their status within the company) engaged in unspecified tortious conduct. That finding cannot sustain a claim for punitive damages. See Estate of Despain v. Avante Grp., Inc., 900 So. 2d 637, 640-41 (Fla. 5th DCA 2005). For these reasons, the Engle Phase I findings cannot provide the “reasonable evidentiary basis” required to support Plaintiff's request for punitive damages. B Plaintiff Has Failed To Proffer Sufficient Evidence To Support A Punitive Damages Award On Her Claims For Fraudulent Concealment And Conspiracy To Fraudulently Conceal 9 Filing 28060041 F WALLACE VS R J REYNOLDS. 05-2014-CA-052862-XXXX-XX Case No.: 05-2014-CA-052862 Under established principles of Florida law, a plaintiff seeking to recover on a claim for fraud must prove detrimental reliance. As the Florida Supreme Court recently recognized, “Engle-progeny plaintiffs must certainly prove detrimental reliance in order to prevail on their fraudulent concealment claims.” Hess v. Philip Morris USA, Inc., -- So. 3d --, 2015 WL 1472319, at *8 (Fla. Apr. 2, 2015), reh’g pending on other grounds; see also, e.g., Humana, Inc. v. Castillo, 728 So, 2d 261, 265 (Fla. 2d DCA 1999) (“Florida law imposes a reliance requirement in an omissions case, which cannot be satisfied by assumptions.”). Moreover, under Florida law, a plaintiff cannot establish reliance through conjecture or speculation that the individual was affected merely as a member of the public at large. See, e.g., Humana, Inc. v. Castillo, 728 So. 2d at 265.° Thus, under Florida law, Plaintiff is required to demonstrate a causal connection between Defendants’ conduct and Mr. Wallace’s misapprehension to prevail on her fraudulent concealment claim. See, e.g., id. at 265 (“Ifa plaintiff claims to be misled, but cannot demonstrate a causal connection between the defendant’s conduct and the plaintiff's misapprehension, the plaintiff cannot recover”). 1 Plaintiff’s Proffer Is Insufficient To Provide A Reasonable Evidentiary Basis For Recovery Of Punitive Damages Plaintiff's proffer fails to demonstrate a reasonable evidentiary basis for recovery of punitive damages on her fraudulent concealment and conspiracy claims, because Plaintiff has not § Morgan v. W.R. Grace & Co., 779 So. 2d 503, 506 (Fla. 2d DCA 2000) (plaintiff could not prove reliance by showing that defendants created “various documents aimed at the general public . . . [that] lulled the . . . public, including her, into a false sense of security about the safety of such reclaimed land”); Morgan v. Canaveral Port Auth., 202 So. 2d 884, 887 (Fla. 4th DCA 1967) (reliance must be proven, and “[i]t cannot be assumed that the appellants relied to their detriment upon any act or omission on the part of appellees”); Palmas Y Bambu, S.A. v. E.1. DuPont de Nemours & Co., 881 So, 2d 565, 573 (Fla. 3d DCA 2004) (holding that plaintiff seeking recovery for fraud under the Florida racketeering statute cannot “relax the reliance requirement” by alleging that defendant’s fraud affected the “body of public information,” and citing with approval a ruling that “reliance cannot be presumed due to a defendant’s subjection of ‘the whole market’ to deceptive advertising”). 10 Filing 28060041 F WALLACE VS R J REYNOLDS. 05-2014-CA-052862-XXXX-XX Case No.: 05-2014-CA-052862 proffered any evidence of Mr. Wallace’s detrimental reliance on a statement by a Defendant concealing or omitting material information not already known to him regarding the health effects or addictive nature of smoking, or any evidence demonstrating a causal nexus between the alleged misconduct of a Defendant that forms the basis of her fraudulent concealment and conspiracy claims and Mr. Wallace’s alleged smoking-related injuries. Plaintiff has identified no statement that Mr. Wallace allegedly relied upon. With nothing in the factual record to support a finding that Mr. Wallace relied on any statement by any Defendant that was misleading because of any omitted or concealed information, which is an essential element of her fraud claim, Plaintiff predicates her motion to amend on internal company documents and advertisements. But these materials likewise have no causal nexus to Mr. Wallace’s alleged injury. For example, Plaintiff proffers a number of internal company documents that discuss everything from cigarette design to marketing research to the health risks of smoking. Yet Plaintiff provides no evidence that Mr. Wallace ever saw any of these internal documents, let alone that he relied on any of them (or a failure to disclose information in them). Similarly, Plaintiff proffers a collection of advertisements, but fails to proffer any evidence from which the jury could find that Mr. Wallace ever saw or heard any of the proffered advertisements, let alone that he relied on them in his smoking behavior. Plaintiffs repeated references to Judge Kessler’s findings in the DOJ decision also do not provide a reasonable basis for recovery of punitive damages. The DOJ decision did not address the claims of any individual smoker. Rather, DOJ was a federal RICO action brought by the U.S. government against several defendants (including Defendants here) seeking injunctive relief to “prevent and restrain” the possibility of future RICO violations. 449 F. Supp. 2d at 27. That litigation cannot possibly provide the requisite evidence of detrimental reliance by Mr. Wallace. 11 Filing 28060041 F WALLACE VS R J REYNOLDS. 05-2014-CA-052862-XXXX-XX Case No.: 05-2014-CA-052862 2 Plaintiff Cannot Alter This Result By Relying On Martin Plaintiff may contend that the First District Court of Appeal’s decision in R.J. Reynolds Tobacco Co. v. Martin, 53 So. 3d 1060 (Fla. Ist DCA 2010), alters the standard for reliance in this case. In Martin, the First District held, based on a post-trial review of the record evidence in that case, that for the purposes of a fraudulent concealment claim for compensatory damages, the jury could infer the smoker’s reliance from evidence of what the court characterized as “pervasive misleading advertising campaigns” and “the false controversy created by the tobacco industry . . . aimed at creating doubt among smokers that cigarettes were hazardous to health.” Id. at 1069-70.’ Martin is not applicable, much less binding, here for several reasons. First, Martin has no bearing on whether Plaintiff has demonstrated a reasonable basis for recovery of punitive damages on her fraudulent concealment and conspiracy claims. In Martin, the First District held only that, for the purposes of a fraudulent concealment claim for compensatory damages, the jury there was permitted to infer the smoker’s reliance. Martin, 53 So, 3d at 1069-70. Such a claim is governed by a “greater weight of the evidence” standard of proof. See, e.g., Wieczoreck v. H&H Builders, Inc., 475 So. 2d 227, 228 (Fla. 1985); Passaat, Ltd. v. Better, 654 So, 2d 980, 981 (Fla. 4th DCA 1995). Florida law requires that the question of whether punitive damages are warranted must be determined based on a much higher “clear and convincing evidence” standard of proof. See, e.g., § 768.725, Fla. Stat; see also Fla. Std. Jury Instr. (Civ.) PD 1a, 1b(2). Plaintiff has no authority to support the proposition that an inference of reliance of the type discussed in Martin can suffice to demonstrate culpability for punitive damages under a clear and convincing evidence standard of proof. Indeed, it is inconceivable that an inference of reliance would be compatible with that higher standard. 7 See also Philip Morris USA Inc. v. Putney, 117 So. 3d 798 (Fla. 4th DCA 2013). 12 Filing 28060041 F WALLACE VS R J REYNOLDS. 05-2014-CA-052862-XXXX-XX Case No.: 05-2014-CA-052862 Moreover, the mere fact that there were punitive damages claims at issue in Martin does not establish that an inference of reliance can be used to support Plaintiff's punitive damages claims. Furthermore, it is significant that the Martin court only ruled that the verdict imposing compensatory damages liability could be upheld on the basis that the jury could have inferred the deceased smoker’s reliance from record evidence presented at trial in that case. When the Martin court found that the record in that case contained sufficient evidence to support an inference that the smoker relied on the tobacco company’s advertising, it had the benefit of viewing the entire body of evidence presented to the jury at trial. But nothing in Martin authorizes a trial court to make such a determination as to the sufficiency of the evidence to support an inference of reliance based on a minimal evidentiary proffer made before trial. Second, any attempt to apply the Martin inference as an essential link to facilitate the pleading of a punitive damages claim under section 768.72 and rule 1.190(f) requires not merely the use of a single inference of reliance, but a succession of dependent inferences that stretch from the premise that Mr. Wallace was exposed to the advertisements to the conclusion that he contracted a smoking-related disease, which would not have occurred but for the fact that he read and relied on those advertisements. As the Florida Supreme Court declared long ago, however, “if'a party to a civil action depends upon the inferences to be drawn from circumstantial evidence as proof of one fact, it cannot construct a further inference upon the initial inference in order to establish a further fact.” Nielsen v. City of Sarasota, 117 So. 2d 731, 733 (Fla. 1960).8 “The rule 5 Courts have recognized an exception to this rule, but the exception applies only when “the original, basic inference was established to the exclusion of all other reasonable inferences.” Nielsen v. City of Sarasota, 117 So, 2d 731, 733 (Fla. 1960) (emphasis added); see also Slitor v. Elias, 544 So. 2d 255, 257-58 (Fla. 2d DCA 1989) (in a case where a party attempted to stack three inferences, holding that “the critical issue is whether the [second inference] can be elevated to the status of a fact to support the [third and] final inference”). This exception clearly does not apply to the series of inferences that the Court would be required to stack for purposes of Plaintiff's motion for leave to plead punitive damages claims on the fraud-based torts. 13 Filing 28060041 F WALLACE VS R J REYNOLDS. 05-2014-CA-052862-XXXX-XX Case No.: 05-2014-CA-052862 that an inference may not be stacked on another inference is designed to protect litigants from verdicts based upon conjecture and speculation.” Stanley v. Marceaux, 991 So. 2d 938, 940 (Fla. 4th DCA 2008) (citation omitted). Thus, Plaintiffs attempt to demonstrate reliance by impermissibly stacking inferences is insufficient to support her claims for punitive damages on the fraud-based torts. And to the extent that other courts have ruled that the Martin inference could be extended for that purpose, Defendants respectfully submit that such rulings go too far. Third, the decision in Martin did not (and could not) eliminate the federal due process requirement that punitive damages may only be awarded to punish conduct that actually caused the injury to the smoker seeking such damages. See Williams, 549 U.S. at 353-57; State Farm, 538 U.S. at 423. To the contrary, the Martin court never addressed the issue of whether an inference of reliance satisfies the federal due process requirement of proof of a causal nexus. This limitation independently requires a causal nexus between the conduct to be punished and the injury allegedly suffered by the smoker. Williams, 549 U.S. at 349 (holding that an award of punitive damages based on injury to someone other than the plaintiff “would amount to a taking of ‘property’ from the defendant without due process”), Consequently, in addition to protecting Defendants from baseless punitive damages claims, the requirements of section 768.72 and rule 1.190 provide an early protection against violations of Defendants’ rights under federal constitutional law. Under section 768.72, a plaintiff may not even assert a claim for punitive damages without showing a “reasonable evidentiary basis for recovery” of such damages. Because only conduct that caused Mr. Wallace’s alleged smoking-related injury can provide a constitutional basis for punitive damages here, Plaintiff must make a proffer that establishes a causal nexus between Defendants’ allegedly punishable conduct for Plaintiff's fraud-based claims and Mr. Wallace’s alleged injuries. 14 Filing 28060041 F WALLACE VS R J REYNOLDS. 05-2014-CA-052862-XXXX-XX Case No.: 05-2014-CA-052862 The foregoing analysis demonstrates that the inference of reliance adopted by the First District in Martin cannot properly be applied in this pretrial context to satisfy the requirement that a plaintiff must make a reasonable showing that punitive damages are recoverable by proffering evidence from which the jury could find that Defendants’ punishable conduct caused Mr. Wallace’s alleged smoking-related injury. Plaintiff has failed to proffer any evidence of any detrimental reliance by Mr. Wallace on any misleading statement allegedly made by a Defendant here. Because proof of fraud must be based on such evidence of individualized reliance — not on compounded assumptions that all members of the public who smoked cigarettes were induced to do so by Defendants’ advertising, and that any resulting injury those smokers suffered was caused by their reliance on that advertising — Plaintiff's request for leave to amend her complaint to plead punitive damages claims should be denied. Til. PLAINTIFF’S MOTION MUST BE DENIED TO THE EXTENT THAT SHE SEEKS PUNITIVE DAMAGES ON HER NON-INTENTIONAL TORT CLAIMS Plaintiff's motion must be denied to the extent that she seeks punitive damages on her non-intentional tort counts for an independent reason. In Soffer, the First District considered the precise issue of whether an Engle progeny plaintiff may assert punitive damages claims for strict liability and negligence despite the failure of the Engle class to timely seek punitive damages on those theories of recovery. See Soffer, 106 So. 3d at 457. After reviewing the history and unique posture of Engle, the First District held that plaintiffs in Engle progeny cases may not assert punitive damage claims other than those that were “allowed in Engle.” Id. at 461. The court specifically ruled that “[p]rogeny plaintiffs . .. may not assert such claims based on strict liability and negligence theories.” /d. The court in Soffer accepted the proposition that progeny plaintiffs “cannot unilaterally accept the enormous benefits of equitable tolling and the res judicata effect of Phase I findings without accepting the 15 Filing 28060041 F WALLACE VS R J REYNOLDS. 05-2014-CA-052862-XXXX-XX Case No.: 05-2014-CA-052862 limitations, express and implied, in that decision” — in effect, that they must “take the bitter with the sweet.” Soffer, 106 So.3d at 459. The First District concluded that Engle progeny plaintiffs may seek punitive damages on their fraudulent concealment and conspiracy claims, but not their non-intentional tort claims, which would “provide an unjustifiable and potentially unintended windfall by expanding Engle beyond its existing parameters.” Jd. at 461; see also id. at 458 (recognizing that “punitive damages for the Engle Class were limited to only the two intentional tort counts”). The Third and Fourth District Courts of Appeal have reached the same result. In Cicone, 123 So. 3d at 616, the Fourth District adopted and applied the First District’s decision in Soffer to hold that an Engle progeny plaintiff, claiming a right to maintain the action based on the status of the smoker as a member of the former Engle class, cannot seek punitive damages on her non-intentional tort claims, including gross negligence. The Third District has recently reached the same conclusion. Williams, -- So. 3d --, No. 3D13-2099, 2014 WL 4344369, at *1 (“/W]e find no basis to support a claim for [punitive] damages on [plaintiff's] remaining non-intentional tort (negligence and strict liability) claims.” (emphasis added)). The same result should be reached here. Plaintiff may contend that the Second District Court of Appeal’s decision in Philip Morris USA Inc. v. Hallgren, 124 So. 3d 350 (Fla. 2d DCA 2013), supports a different result. It does not for several reasons. As an initial matter, in reaching its decision, the Hallgren court placed great weight on the proposition that punitive damages claims are not a separate causation of action, but “merely a remedy that must be asserted in conjunction with a substantive claim.” Jd. at *4. This argument, however, misapprehends the law on equitable tolling, as applied in Soffer and 16 Filing 28060041 F WALLACE VS R J REYNOLDS. 05-2014-CA-052862-XXXX-XX Case No.: 05-2014-CA-052862 Ciccone. Under settled principles of Florida law, equitable tolling applies only where the claims brought by the former class member are “identical” to those pursued by the class itself. See Hromyak v. Tyco International Ltd., 942 So. 2d 1022, 1023 (Fla. 4th DCA 2006) (strict identity between individual and former class claims is an “essential ingredient” of equitable tolling); see also Raie v. Cheminova, Inc., 336 F.3d 1278, 1283 (11th Cir. 2003) (denying equitable tolling because plaintiffs could not “demonstrate that their wrongful death action was included in the [original] class action”). Here, strict liability and negligence claims that include demands for punitive damages are not “identical” to the compensatory strict liability and negligence claims that were permissibly asserted in Engle, even if punitive damages are conceived of as a remedy as opposed to a separate “claim.” Indeed, such claims are so distinct and different in Florida that a plaintiff must seek leave of court to amend the complaint before seeking punitive damages for non-intentional torts. See § 768.72(1), Fla. Stat.; Globe Newspaper Co. v. King, 658 So. 2d 518, 519 (Fla. 1995). Accordingly, those claims are not entitled to equitable tolling, and the courts in Soffer, Ciccone, and Williams correctly held that Engle progeny plaintiffs are precluded from asserting such claims. The Second District’s conclusion that negligence and strict liability claims should be deemed “identical” to those in Engle, even though they seek vastly broader remedies, is inconsistent with both the reasoning of Hromyak and the purpose of equitable tolling. As the court in Hromyak explained, a plaintiff with different claims is not entitled to the benefit of tolling because “[i]f he was not a member of the class, he could derive no benefit from its pendency,” and “if he had been a member, his interests would have been asserted in that litigation.” 942 So. 2d at 1023. 17 Filing 28060041 F WALLACE VS R J REYNOLDS. 05-2014-CA-052862-XXXX-XX Case No.: 05-2014-CA-052862 The same logic applies with equal force here: Plaintiff claims a right to maintain this action, which would otherwise have been extinguished by the statute of limitations, based on. her claim that Mr. Wallace was an Engle class member, thereby entitling her to the benefit of the equitable tolling of limitations and the one-year savings period provided by the Florida Supreme Court in Engle. To the extent that Plaintiff's action is dependent on Mr. Wallace’s alleged status as an Engle class member, her interests were fully represented when class counsel decided which claims to assert and whether to include a demand for punitive damages in those claims. If the Florida Supreme Court had not decertified Engle, Plaintiffs demand for punitive damages on negligence and strict liability would have unquestionably been rejected — the class’s demand for the same relief failed in Phase II-B of the Eng/e trial. That fact alone is dispositive, because equitable tolling is intended to prevent the decertification of the class from imposing unfair hardship on plaintiffs. It is not a vehicle for Plaintiff to obtain an unfair windfall, by placing her in a better position than she would have been prior to decertification. The Second District cited no authority to the contrary, and the fact that punitive damages can be conceived of as a remedy does not alter this conclusion. Moreover, the Hallgren court’s conclusion that the defendants would not be prejudiced by allowing Plaintiff to assert new claims for punitive damages is likewise misplaced. Here, the prejudice is clear. When the Engle class expressly limited its punitive damages demand to its intentional tort claims, Defendants assessed their exposure and planned their defenses to those claims accordingly. Yet now, Engle progeny plaintiffs seek to expand their punitive damages claims to include non-intentional tort claims, which could increase Defendants’ exposure to potential punitive damages awards several times over. This 18 Filing 28060041 F WALLACE VS R J REYNOLDS. 05-2014-CA-052862-XXXX-XX Case No.: 05-2014-CA-052862 vast expansion in potential liability — occurring decades after the conduct at issue and 19 years after Engle was filed — is plainly prejudicial to Defendants. Accordingly, Plaintiff's motion for leave to plead a request for punitive damages on her non-intentional tort claims should be denied, because she is precluded from recovering punitive damages on those claims as a matter of law. CONCLUSION For the reasons set forth above, the Court should deny Plaintiff's Motion to Plead Punitive Damages Against Defendants. Respectfully submitted, /s/ Ryan B. Witte Mark J. Heise, E