Tobacco's First Loss

By Stephen Koepp

"The doctors couldn't get her to stop. Her husband couldn't get her to stop. - She wasn't going to take orders from anybody."

-- DONALD COHN, ATTORNEY FOR THE LIGGETT GROUP

"Rose Cipollone had the upper lobe of her lung cut out. She still continued to smoke. Doesn't that suggest some kind of a dependence?"

-- MARC EDELL, ATTORNEY FOR THE CIPOLLONES

Rose Cipollone was intensely stubborn, especially about her cigarette habit. The New Jersey housewife often ordered groceries she did not need just to get a fresh pack of smokes delivered. She ignored her husband and children when they started urging her to quit in the early 1950s, waving them away when they showed her magazine articles with headlines like CANCER BY THE CARTON. She did make the concession of switching in 1955 from Chesterfield straights to L&M filters, which were advertised at the time as "just what the doctor ordered." But Cipollone kept on smoking even after developing a malignant tumor that forced surgeons to remove part of her right lung in 1981. She continued sneaking puffs after the entire lung was taken out in 1982, and finally quit about a year before her death from cancer, at 58, in 1984.

Yet Cipollone's name will not be lost among the cancer statistics, because as a final gesture, she turned her stubbornness against the tobacco companies that sold her the cigarettes. She and her husband Tony filed a liability claim, which she made him promise to pursue after her death, though no one had ever won such a case against a cigarette maker. Last week the five-year-old lawsuit made history when a six-member federal jury in Newark ordered the Liggett Group, maker of the Chesterfield and L&M brands, to pay Tony Cipollone $400,000 in compensatory damages for its contribution to his wife's death. Of more than 300 lawsuits filed against tobacco companies since 1954, this case was the first in which the defendant was held at least partly liable or ordered to pay damages. "The myth of the tobacco industry's invincibility has been shattered once and for all," declared Alan Darnell, an attorney for Cipollone.

Anti-tobacco forces celebrated the verdict as a breakthrough. John Banzhaf, a law professor at George Washington University who heads the Action on Smoking and Health group, called the decision the "most important legal development involving tobacco since the cigarette companies were forced off television ((in 1971))." Product-liability experts predicted that the case would provide a boost in confidence and a how-to manual for the plaintiffs in 110 similar cases now being pursued in the U.S. Before long, the verdict could prompt fresh lawsuits as well, since cigarette foes like Banzhaf estimate that smoking contributes to the premature deaths of some 350,000 Americans each year.

Even so, the tobacco industry (1987 revenues: $32 billion) was claiming victory just as loudly. Said Hamish Maxwell, chairman of Philip Morris, the industry leader: "There's nothing about the verdict that indicates there's been a break in the dike. One case does not make a trend." The Cipollone case was considered the strongest ever brought against the industry, yet the jury agreed with only a small portion of the plaintiffs' broad allegations. Two of the three cigarette manufacturers charged in the case, Lorillard and Philip Morris, which produced brands that Cipollone smoked later in her life, were exonerated from any liability. Nor did the jury find any of the companies guilty of the most serious accusations: fraud and conspiracy to hide the hazards of smoking from the public. Those transgressions might have produced damage awards running into the millions of dollars.

The jury agreed only that the Liggett Group, based in Durham, N.C., through its advertisements falsely gave Cipollone a so-called express warranty that its products were safe -- at a time when the company knew full well that medical research was suggesting otherwise. The jury could apply that finding only to the brands she smoked before 1966, the point at which the Government began requiring cautionary labels on cigarette packages. Reason: federal appeals courts have deemed those notices to be sufficient public warning to absolve tobacco companies from liability. Thus the era before 1966 may turn out to be the tobacco industry's vulnerable spot.

The lawyers who won last week's case, however, took home no profits for their law firms. Led by New Jersey Attorney Marc Edell, 37, they spent more than $2 million in pressing the lawsuit. Said Donald Cohn, lead lawyer for Liggett's team: "This was not a successful financial endeavor. No lawyer will want to spend what Edell spent for the verdict he was awarded." But the expenses were vastly greater for the defense, which laid out an estimated $75 million or more on the case and fielded as many as three dozen lawyers, an army that the Cipollone team, outnumbered 8 to 1, called a "wall of flesh." Said Edell: "They try to wear you down and exhaust your resources."

The anti-tobacco forces hope that Edell's trailblazing effort will sharply reduce the cost of litigation for future tobacco lawsuits. This is because, in attempting to prove an industry conspiracy, Edell had to go through a 4 1/2- year discovery process in which he forced the defendants to produce more than 100,000 internal documents, many relating to health research, of which he entered 300 pieces as evidence. Says Banzhaf: "Future lawyers will only have to spend a couple of thousand dollars rather than a couple of million during the discovery process. They will no longer have to beat a new path."

The memos and reports used in the case by Edell establish that tobacco- company executives were aware in the early 1940s that medical researchers were linking smoking to cancer, a connection the industry still denies. A 1961 report produced by Philip Morris listed the specific cancer-causing ingredients in cigarette smoke, concluding, "Carcinogens are found in practically every class of compounds in smoke." Another study, prepared the same year by the Arthur D. Little consulting firm for Liggett, stated, "There are biologically active materials present in cigarette tobacco that are (a) cancer causing (b) cancer promoting (c) poisonous (d) stimulating, pleasurable, and flavorful."

Even more provocative were the so-called mouse-painting papers, describing experiments in which Liggett scientists swabbed a tobacco condensate on the backs of mice. Liggett acknowledges that some of the rodents grew tumors and died but denies finding any conclusive pattern. The cigarette makers dispute the importance of the Cipollone team's trove of uncovered documents, pointing out that the prosecution lawyers failed to prove their conspiracy charge. Says James Kearney, an attorney for Liggett: "The documents were overhyped and taken out of context to begin with."

In fact, the most persuasive exhibits in the case were no secret at all: magazine ads that the tobacco companies published in the 1950s and '60s. Among them were ads that appeared in 1954 issues of LIFE, in which such Hollywood stars as Barbara Stanwyck and Rosalind Russell gave testimonials for L&M's new "miracle product," the "alpha cellulose" filter that is "just what the doctor ordered." Several other brands made similar claims at the time in response to increasing nervousness about smoking and health. R.J. Reynolds said, "More doctors smoke Camels than any other cigarette."

Cipollone chose L&M, she explained before her death, partly because of the testimonials by celebrities in the company's ads. Said she: "I remember they used to be so glamorous. They always used to wear evening gowns." Defense lawyers sought to establish that Cipollone was an intelligent woman who made a decision to keep smoking despite plenty of signs that it was risky. As evidence, they introduced 115 articles from TIME, 47 articles from Reader's Digest and even lyrics from popular songs like the 1947 hit Smoke, Smoke, Smoke, which included the words "Puff, puff, and if you smoke yourself to death."

What was difficult for Cipollone's lawyers to prove was that she was helplessly addicted. They contended that her failure to quit despite her encroaching cancer was dramatic evidence of her inability to shake the habit. The defense argued that she could have given it up sooner had she really tried, as millions of other smokers have managed to do. The jury, apparently not fully persuaded of her determination to quit, decided the responsibility for her illness was 20% the cigarette maker's and 80% her own. Since New Jersey law says that product-liability awards can be given only if the defendant is at least 50% to blame, Cipollone's estate received no award, even though her husband won the $400,000, which the defense lawyers accuse the jury of handing out as an inappropriate gesture of sympathy. Still, anti-tobacco lawyers think victims and their estates will have an easier time winning awards in other states where the proof-of-liability threshold is far lower. Mississippi's, for example, is just 1%.

Liggett plans to appeal the Cipollone verdict, contending among other things that the presiding federal judge, H. Lee Sarokin, was biased against the defendants. Says Arthur Stevens, Lorillard's general counsel: "We could not have had a more extreme adversary." In denying one of the tobacco industry's motions for dismissal of the case, Sarokin stated that he believed there was ample evidence of a "tobacco-industry conspiracy, vast in its scope, devious in its purpose and devastating in its results."

Even if the Cipollone verdict stands and inspires similar cases, the cigarette industry is not about to start settling lawsuits out of court or to back out of the business. While the six major U.S. tobacco makers have diversified into products ranging from beer to biscuits, their profits from cigarettes are as robust as ever. The industry is expected to have operating earnings of $6.4 billion this year, up from $5.2 billion in 1986. The number of cigarettes smoked by Americans has steadily declined, from 640 billion in 1981 to 565 billion last year, but the companies have more than compensated by raising prices: the average cost of a pack today is $1.24, compared with 66 cents in 1981. At the same time, the producers have increased sales abroad, especially in Asia and Africa.

Tobacco's profitability gives the industry large resources for fighting lawsuits. Estimates of what cigarette manufacturers have spent on defense in recent years range from $600 million to $3 billion. According to calculations by Marc Cohen, who follows the industry for the Sanford C. Bernstein investment firm, U.S. tobacco companies could lose 15,000 verdicts a year like Cipollone's and pay the total $6 billion in damages simply by raising the price of cigarettes 25 cents a pack -- even taking into account a 10% drop in business because of the price increase.

The biggest impact of the Cipollone verdict may be political rather than financial. Concedes Maxwell, the Philip Morris chairman: "The industry suffered some public relations damage during the trial. By describing the documents as secret, the plaintiffs made it sound as though we were doing something sinister or underhanded." The case could inspire Congress to enact new limits on tobacco -- for example, an extension of a smoking ban to all domestic airline flights instead of just shorter hauls. Predicted Representative Robert Torricelli, a New Jersey Democrat: "The impact in Congress, state legislatures and town halls is going to be rather profound." If that is so, Cipollone's late-awakening rebellion against tobacco is likely to endure longer than she could have imagined.

With reporting by Thomas McCarroll/Newark