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Smoker Loses $15 Million Award But Verdict Upheld Against RJR

A former smoker who had both of his legs amputated due to circulation problems has lost his $15 million punitive damages award against R.J. Reynolds Tobacco Co. after the 10th Circuit said Kansas law does not recognize claims for fraudulent concealment against a tobacco company.

David Howard, a spokesman for R.J. Reynolds, said the company is pleased the three-judge panel agreed unanimously to throw out the punitive damages award. He said the U.S. Court of Appeals for the 10th Circuit acted appropriately in finding that plaintiff David Burton's claim for fraudulent concealment should not have proceeded under Kansas law.

Although the 10th Circuit reversed the claim that led to the punitive damages award, the panel upheld the rest of Burton's claims — for failure to warn and failure to test — and the resulting $200,000 in compensatory damages. His attorney was also pleased with the ruling.

"This is one of the most favorable [opinions] in any tobacco case" for plaintiffs, said Kenneth B. McClain of Humphrey, Farrington & McClain.

McClain said the ruling can be cited as precedent in tobacco litigation around the country.

Burton began smoking around 1950, at age 14 or 15, and smoked Camel and Lucky Strike cigarettes for 43 years, court records say. He quit in 1993 after his legs were surgically amputated due to smoking-related vascular disease.

A jury in the U.S. District Court for the District of Kansas made the award for compensatory damages in 2002. The panel found R.J. Reynolds 99 percent liable and Brown & Williamson Tobacco Corp. 1 percent liable. The companies have since merged. The jury said RJR should pay punitive damages in an amount to be determined by the judge.

U.S. District Judge John Lungstrum awarded $15 million, saying RJR's concealment of the addictive nature of tobacco was "particularly nefarious."

Burton's attorneys reminded the judge that at trial the plaintiff produced "over 100 documents and 16 witnesses illustrating [RJR's] knowledge that its cigarettes cause severe disease, addiction and premature death."

Judge Lungstrum said the defendant was not allowing consumers to make informed choices.

"A free society where people are permitted to engage in conduct which may not always be beneficial or healthful to them depends on the manufacturers and purveyors of the products which people choose to consume being frank and open about the dangers of which they are aware in order to permit truly free choice," Judge Lungstrum said in his ruling.

RJR appealed the judgment to the 10th Circuit, arguing that there was no legitimate basis for awarding any punitive damages. The information the company allegedly concealed was publicly known during the entire time Burton smoked, RJR said in a statement at the time the punitive damages judgment was entered.

The defendant told the appeals court panel that Kansas law would not recognize a claim for fraudulent concealment under this fact scenario. The panel agreed.

"Because a fiduciary relationship [between Burton and RJR] does not arise, claims that a cigarette manufacturer has not warned of known product dangers are generally not cognizable as fraudulent-concealment claims under Kansas law. Rather, they are cognizable as failure-to-warn claims," the 10th Circuit said in its Feb. 9 opinion.

It reversed the $15 million punitive damages award because the damages were based on the fraudulent-concealment claims.

The panel found, however, that the evidence supports Burton's compensatory damages award. The court affirmed the jury's verdict on the failure-to-warn and failure-to-test claims. It remanded that case so that judgment would be entered by the District Court in RJR's favor on the fraudulent-concealment claim.