The Engle tobacco odyssey began in 1994, when a Florida trial court certified a nationwide smokers' class action lawsuit against the major domestic cigarette companies and two tobacco industry organizations for injuries allegedly caused by smoking. Nearly five years ago, the Florida Supreme Court decertified the class and instructed that certain jury findings relating to the tobacco defendants' products and conduct would "have res judicata effect" in individual damages actions brought by former Engle class members. Since that time, the question of how to properly apply the "Engle findings" in accordance with the Florida Supreme Court's directive-and whether and to what extent giving those findings preclusive effect in Engle progeny cases would violate the tobacco defendants' due process rights-has confronted the state and federal trial courts tasked with resolving thousands of these cases. After a number of twists and turns, that question is before this Court for a second time.
The extensive history of the Engle litigation was recently summarized by the Eleventh Circuit:
Almost two decades ago, six individuals filed a lawsuit in Florida state court against the major domestic makers of cigarettes and two industry organizations seeking over $100 billion in both compensatory and punitive damages for injuries allegedly caused by smoking. Liggett Grp. Inc. v. Engle, 853 So. 2d 434, 440-41 (Fla. 3d DCA 2003)("Engle II"). The plaintiffs asserted claims of "strict liability, negligence, breach of express warranty, breach of implied warranty, fraud, conspiracy to commit fraud, and intentional infliction of emotional distress." Id. at 441. After some wrangling between the parties and an interlocutory appeal to the Third District Court of Appeal, a class was certified composed of "[a]ll Florida citizens and residents," R.J. Reynolds Tobacco Co. v. Engle, 672 So. 2d 39, 42 (Fla. 3d DCA 1996) ("Engle I"), "and their survivors who have suffered, presently suffer or who have died from diseases and medical conditions caused by their addiction to cigarettes that contain nicotine." Engle v. Liggett Grp. Inc., 945 So. 2d 1246, 1256 (Fla.2006) ("Engle III"). There were estimated to be at least 700,000 class members. Id. at 1258; Engle II, 853 So. 2d at 442.
To manage the class action, the trial court developed a trial plan that had three phases. See Engle III, 945 So. 2d at 1256. Phase I was a year-long trial that involved only "common issues relating ... to the defendants' conduct and the general health effects of smoking." Id. The jury was given a verdict form at the end of Phase I containing a series of questions. The verdict form asked the jury to answer "yes" or "no" to each question for specific time periods for each of the defendants.
The Engle class came close to running the table--the jury answered "yes" to almost every question put to them. The jury found: (1) that smoking cigarettes causes 20 of 23 listed diseases or medical conditions; (2) that cigarettes containing nicotine are addictive or dependence producing; (3) that the defendants placed cigarettes on the market that were defective and unreasonably dangerous; (4) that the defendants made a false statement of a material fact, either knowing the statement was false or misleading, or being without knowledge as to its truth or falsity, with the intention of misleading smokers; (4a) that the defendants concealed or omitted material information, not otherwise known or available, knowing the material was false and misleading, or failed to disclose a material fact concerning or proving the health effects and/or addictive nature of smoking cigarettes; (5) that the defendants entered into an agreement to misrepresent information relating to the health effects of cigarette smoking, or the addictive nature of smoking cigarettes, with the intention that smokers and members of the public rely to their detriment; (5a) that the defendants entered into an agreement to conceal or omit information regarding the health effects of cigarette smoking, or the addictive nature of smoking cigarettes, with the intention that smokers and members of the public rely to their detriment; (6) that the defendants sold or supplied cigarettes that were defective in that they were not reasonably fit for the uses intended; (7) that the defendants sold or supplied cigarettes that, at the time of sale or supply, did not conform to representations of fact made by the defendants either orally or in writing; (8) that the defendants failed to exercise the degree of care that a reasonable cigarette manufacturer would exercise under like circumstances; (9) that the defendants engaged in extreme and outrageous conduct or with reckless disregard relating to cigarettes sold to Florida smokers with the intent to inflict severe emotional distress; and (10) that the defendants' conduct rose to a level that would permit a potential award or entitlement to punitive damages. See id. at 1257 n. 4.
In Phase I, however, the jury was not asked whether the class had proven any of its claims; it did not decide if the defendants were liable to anyone on any cause of action. See Engle III, 945 So. 2d at 1246 ("In Phase I, the jury decided issues related to Tobacco's conduct but did not consider whether any class members relied on Tobacco's misrepresentations or were injured by Tobacco's conduct."); Engle II, 853 So. 2d at 450 ("In Phase [I], the jury answered certain general questions about the defendants' products and conduct. The questions related to some, but not all of the elements of each legal theory alleged .... The jury did not determine whether defendants were liable to anyone. Essential elements of liability, such as reliance and proximate cause, were [not] tried in Phase I.").
Later, in Phase II, the same jury did determine that the defendants' conduct was the legal cause of three individual class representatives' injuries. The three were awarded a total of $12.7 million in compensatory damages after their comparative fault was taken into account. Engle III, 945 So. 2d at 1257. The jury also awarded a lump sum of $145 billion in punitive damages to the entire Engle class. Id.
Before Phase III[-in which new juries were to decide the individual liability and damages claims for each individual class member-]could be conducted, the defendants appealed the verdicts the jury had returned in Phases I and II. Engle II, 853 So. 2d at 441-42; see also Brown v. R.J. Reynolds Tobacco Co., 576 F. Supp. 2d 1328, 1332 (M.D. Fla. 2008)[("Bernice Brown I")]. The appeal resulted in a Third District Court of Appeal decision that the Engle class should be decertified. The court concluded that class action treatment was inappropriate because "the plaintiffs smokers' claims [we]re uniquely individualized and [could not] satisfy the 'predominance' and 'superiority' requirements imposed by Florida's class action rules." Engle II, 853 So. 2d at 444. The court also reversed the compensatory damages award in favor of the three individual class representatives, finding that none of them had valid claims against any of the defendants. As for the punitive damages award, the court reversed it on a variety of grounds that are not relevant to the present case. See id. at 470.
The class appealed the Third District Court of Appeal's decision to the Florida Supreme Court. That court agreed that the punitive damages award to the class should be reversed, Engle III, 945 So. 2d at 1254, and agreed with the reversal of the compensatory damages award to one of the three individual class representatives, id. at 1276. However, the court reinstated the compensatory damages award to the other two class representatives. Id. For our purposes though, the most important parts of the Engle III decision are those involving certification of the Engle class and the jury's findings in Phase
The Florida Supreme Court decided that the trial court had not abused its discretion in certifying the Engle class for Phases I and II but also decided that "continued class action treatment for Phase III of the trial plan [was] not feasible because individualized issues such as legal causation, comparative fault, and damages [would] predominate." Id. at 1267-68. As for the jury's findings in Phase I, the court threw out four of them but determined that the remainder could stand.*fn2 See Engle III, 945 So. 2d at 1255. (We will refer to the findings that were not thrown out by the Florida Supreme Court as the Phase I "approved" findings.) The court then set out where the case should go from there: ["]The pragmatic solution is to now decertify the class, retaining the jury's Phase I findings other than those on the fraud and intentional infliction of emotion distress claims, which involved highly individualized determinations, and the findings on the entitlement to punitive damages questions, which was premature. Class members can choose to initiate individual damages actions and the Phase I common core findings we approved above will have res judicata effect in those trials.["] Id. at 1269 (emphasis added).
Brown v. R.J. Reynolds Tobacco Co., 611 F.3d 1324, 1326-29 (11th Cir. 2010) ("Bernice Brown II") (footnote in original; other footnotes omitted).*fn3
B. The Engle Progeny Cases and Bernice Brown
Former Engle class members who wished to pursue "individual damages actions" were required to file their claims within one year of the Florida Supreme Court's mandate in Engle III, which left a deadline of January 11, 2008. Engle III, 945 So. 2d at 1277. An estimated 9,000 individual suits, which have come to be known as "Engle progeny cases," were brought within the one-year window created by the Florida Supreme Court's savings period. (See Report of Temporary Special Master on Case Management of Engle Progeny Cases ("TSM Report"), Engle Master Docket Doc. 147, at 18.) Several thousand such Engle progeny cases were either timely filed in-or removed to-this Court in late 2007 and early 2008. See Bernice Brown I, 576 F.Supp.2d at 1334.
In their complaints before this Court, the plaintiffs asserted that the Phase I approved findings preclusively established the conduct elements of their Engle progeny claims, meaning they need only prove up "specific causation, apportionment of damages, comparative fault, compensatory damages, and punitive damages" in their individual actions. Bernice Brown II, 611 F.3d at 1329. The tobacco defendants disagreed, and moved pursuant to Fed. R. Civ. P. 16(c) for a pretrial ruling "to determine the preclusive effects of the Engle Phase I findings and determine whether those findings may be used to establish any of the elements of Plaintiffs' various claims and whether such use may be done in accordance with the dictates of established preclusion law and constitutional due process." Bernice Brown I, 576 F.Supp.2d at 1334. In an Order dated August 28, 2008, another Judge of this Court determined that under Florida preclusion law "the findings [could] not be given preclusive effect in any proceeding to establish any element of an Engle plaintiff's claim." Id. at 1348. As "an additional basis for its decision," the Court found that allowing the Phase I approved findings to establish elements of an Engle plaintiff's cause of action would violate the defendants' due process rights. Id. at 1344-46. At the parties' request, the Bernice Brown I decision was certified to the Eleventh Circuit for interlocutory appeal. Id. at 1348.*fn4
The Eleventh Circuit began its analysis of the Engle preclusion issue by noting that, pursuant to the Full Faith and Credit Act, 28 U.S.C. § 1738, "a federal court must 'give preclusive effect to a state court judgment to the same extent as would courts of the state in which the judgment was entered.'" Bernice Brown II, 611 F.3d at 1331 (quoting Kahn v. Smith Barney Shearson Inc., 115 F.3d 930, 933 (11th Cir.1997)). In other words, "the Phase I approved findingsmust be given the same preclusive effect in this federal court case that they would be given if the case were in state court. Florida preclusion law controls." Id. Without the benefit of a Florida appellate court decision directly addressing the preclusive scope of the Phase I approved findings, the Eleventh Circuit canvassed existing Florida preclusion law to determine precisely what "res judicata effect" they would be given in a Florida state court.
As an initial matter, the Eleventh Circuit determined that the Florida Supreme Court's reference to "res judicata" was necessarily a reference to "issue preclusion" rather than "claim preclusion" because "factual issues and not causes of action were decided in Phase I." Id. at 1333.*fn5 In Florida, the Court noted, issue preclusion "only operates to prevent the re-litigation of issues that were decided, or 'actually adjudicated,' between the parties in an earlier lawsuit;" that is, the doctrine "prevents 'parties from litigating in the second suit issues--[i.e.] points and questions--common to both causes of action and which were actually adjudicated in the prior litigation.'" Id. at 1334 (quoting Gordon v. Gordon, 59 So. 2d 40, 44 (Fla.1952)). The Court found that "Florida courts have enforced [this] 'actually adjudicated' requirement with rigor," such that "[i]ssue preclusive effect is not given to issues which could have, but may not have, been decided in an earlier lawsuit between the parties." Id. (citations omitted).
Applying the "actually adjudicated" requirement to the Engle findings, the Court concluded that "the Phase I approved findings may not be used to establish facts that were not actually decided by the jury." Id. The Court thus declined to address whether using the approved findings to establish facts which may not have been "actually decided" would violate Defendants' due process rights "because under Florida law the findings could not be used for that purpose anyway." Id. "The bottom line," the Court concluded, "is that the Phase I approved findings may be given effect to the full extent of, but no farther than, what the jury found. The disagreement is about what the jury actually did find." Id.
To determine "what the jury found," the Eleventh Circuit interpreted Florida law to require "the asserting party to show with a 'reasonable degree of certainty' that the specific factual issue was determined in its favor." Id. at 1335 (quoting Seaboard Coast Line R.R. Co. v. Indus. Contracting Co., 260 So. 2d 860, 864-65 (Fla. 4th DCA 1972) (emphasis added). The Court explained that an Engle progeny plaintiff could utilize "[t]he entire record" to meet this burden, "point[ing] to specific parts of [the record] to support its position, so long as those parts of the record combine to show to a reasonable degree of certainty that the jury made the specific factual determination that is being asserted." Id.*fn6 In closing, the Court noted:
In the pre-trial order that is the subject of this interlocutory appeal, the district court decided that the Phase I approved findings may not be used to establish any element of the plaintiffs' causes of action. The district court reached that conclusion without first giving preclusive effect to the Phase I approved findings.
The Phase I approved findings have to be given preclusive effect; they do establish some facts that are relevant to this litigation. Otherwise, the Florida Supreme Court's statement in Engle III that the Phase I approved findings were to have "res judicata effect" in trials involving former class members would be meaningless. It is for the district court to determine, for example, whether the jury's answer to Question 3 [i.e., that the defendants placed cigarettes on the market that were defective and unreasonably dangerous] establishes only that the defendants sold some cigarettes that were defective and unreasonably dangerous, or whether the plaintiffs have carried their burden of showing to a reasonable degree of certainty that it also establishes that all of the cigarettes that the defendants sold fit that description. See Seaboard, 260 So. 2d at 864-65.
Until the scope of the factual issues decided in the Phase I approved findings is determined, it is premature to address whether those findings by themselves establish any elements of the plaintiffs' claims. Only after Florida law is properly applied to determine the scope of the facts established by the approved findings can it be decided which, if any, elements of the claims are established by them. Accordingly, the district court's ruling that "the findings may not be given preclusive effect in any proceeding to establish any element of an Engle Plaintiff's claim," cannot stand, at least not at this time.
Id. at 1335-36 (emphasis added). The Eleventh Circuit thus vacated and remanded, leaving it to this Court "to apply Florida law as we have outlined it and decide in the first instance precisely what facts are established when preclusive effect is given to the approved findings." Id. at 1336.
After the Eleventh Circuit issued its mandate in August 2010, the parties filed various motions proposing that this Court's stay be lifted in a number of select Engle progeny cases, which would then proceed to discovery and trial. (See Engle Master Docket, Docs. 5, 6, 8, 9). Following a December 7, 2010 case management conference (Engle Master Docket, Doc. 30), the Court entered its First Omnibus Engle Order (Engle Master Docket, Doc. 42, "First Omnibus Engle Order"), lifting the stay in twelve "lead" cases only.*fn7 With respect to the preclusion issue on remand from Bernice Brown II, the parties were directed to file motions and memoranda in each activated case so that this Court could determine which Engle facts should be given preclusive effect under Florida law as the Eleventh Circuit had outlined it. (First Omnibus Engle Order at 2.)
Before the Court could undertake that task, however, the landscape of Florida preclusion law-specifically as it pertains to Engle-changed. On December 14, 2010, the First District Court of Appeal became the first Florida appellate court to address "the extent to which an Engle class member can rely upon the findings from the class action when she individually pursues one or more Engle defendants for damages." R. J. Reynolds Tobacco Co. v. Martin, 53 So. 3d 1060, 1066 (Fla. 1st DCA 2010).*fn8 In Martin, a cigarette smoker's widow sued RJR seeking damages for her husband's death, alleging causes of action for strict liability, fraud by concealment, conspiracy to commit fraud, negligence, and punitive damages. Id. at 1064. After a jury trial, the trial judge instructed the jury, in pertinent part:
This action has been brought as a part of a case known as the Engle class action. The first issue for your determination . . . is whether Benny Martin was a member of the Engle class. Certain findings from that action are binding upon you, the Court and the parties. The findings may not be denied or questioned, and they must carry the same weight they would have if you had determined them yourselves. The established findings are: Finding one, is that cigarettes are addictive. Finding two, is that cigarettes cause lung cancer.
If you find that Benny Martin is a member of the Engle class, certain other findings are binding upon you, the Court and the parties. The findings may not be denied or questioned, and they must carry the same weight they would have if you had determined them yourselves. Those established findings are: Finding three, is that R.J. Reynolds Tobacco Company was negligent. Finding four, is that R.J. Reynolds Tobacco Company placed cigarettes on the market that were defective and unreasonably dangerous. Finding five, is that R.J. Reynolds Tobacco Company conspired with other companies to conceal or omit information regarding the health effect [sic] of cigarettes or their addictive nature or both. Those companies include Phillip Morris, Liggett, Lorillard, Brown & Williamson Tobacco Corporation, individually, and as successors to the American Tobacco Company, the Council for Tobacco Research, USA, Inc., and the Tobacco Institute. Finding six, is that R.J. Reynolds Tobacco Company, in furtherance of that conspiracy, concealed or omitted material information, not otherwise known or available, knowing that material was false or misleading, or failed to disclose a material fact concerning the health effects or addictive nature of smoking cigarettes or both. * * * The findings that I have described to you do not establish that R.J. Reynolds Tobacco Company is liable to Mrs. Martin, nor do they establish whether Benny Martin was injured by R.J. Reynolds Tobacco Company's conduct or the degree, if any, to which R.J. Reynolds Tobacco Company's product was the sole or contributing cause of Benny Martin's death. The findings establish only what they expressly state, and you must not speculate or guess as to the basis for the findings.
Id. at 1064-65 (emphasis added). The jury ultimately found that addiction to RJR cigarettes was a legal cause of Mr. Martin's death; RJR's conspiracy to conceal and actual concealment of information was a legal cause of Mr. Martin's death; RJR and Mr. Martin were respectively 66% and 34% responsible for Mr. Martin's death; and punitive damages were warranted. The jury awarded Mrs. Martin $5 million in compensatory damages, which the court later reduced to $3.3 million based on the jury's apportionment of fault, and $25 million in punitive damages. Id. at 1066.
On appeal, RJR contended that the trial court, by instructing the jury that Mrs. Martin need not present evidence as to RJR's conduct because those facts had been conclusively established in Phase I, had given the Phase I findings an overly broad preclusive effect:
In RJR's view, the findings given res judicata effect by the supreme court facially prove only that RJR at some point manufactured and sold an unspecified brand of cigarette containing an undefined defect; RJR committed one or more unspecified negligent acts; RJR on some occasion concealed unspecified information about the health effects of smoking and the addictive nature of smoking; and RJR and several other entities agreed to conceal said unspecified information. Thus, RJR argues, notwithstanding the Engle findings Mrs. Martin was required to prove Lucky Strike brand cigarettes contained a specific defect rendering the brand unreasonably dangerous; RJR violated a duty of care it owed to Mr. Martin; RJR concealed particular information which, had it been disclosed, would have led Mr. Martin to avoid contracting lung cancer; and RJR was part of a conspiracy to conceal the specified information.
The Martin court disagreed with RJR's characterization, which it termed "an application of the supreme court's decision that would essentially nullify it." Id. Rather, the court found, "[n]o matter the wording of the findings on the Phase I verdict form, the jury considered and determined specific matters related to the defendants' conduct. Because the findings are common to all class members, Mrs. Martin, under the supreme court's holding in Engle[ III], was entitled to rely on them in her damages action against RJR." Id. at 1067 (emphasis added). However, as the Martin court acknowledged, this conclusion merely begged the question: "to what extent could Mrs. Martin use the Engle findings to establish the elements of her claims?" Id. (emphasis added).
In answering this question, the court considered the Eleventh Circuit's decision in Bernice Brown II. Though it "generally agree[d]" with the Eleventh Circuit's analysis of Florida preclusion law, the Martin court found it "unnecessary to distinguish between [claim or issue preclusion] or to define what the supreme court meant by 'res judicata' to conclude the factual determinations made by the Phase I jury cannot be relitigated by RJR and the other Engle defendants." Id. Most critically, the court disagreed with the Eleventh Circuit's conclusion that "every Engle plaintiff must trot out the class action trial transcript to prove applicability of the Phase I findings." Id. Rather, the court held, "the common issues" decided by the Phase I jury, "which the jury decided in favor of the class, were the 'conduct' elements of the claims asserted by the class, and not simply, as characterized by the Eleventh Circuit, a collection of facts relevant to those elements." Id. (emphasis in original).
The Martin court found support for its holding in the Final Judgment and Amended Omnibus Order entered by the Phase I trial judge, Engle v. RJ Reynolds Tobacco Co., No. 94--08273, 2000 WL 33534572 (Fla.Cir.Ct. Nov. 6, 2000). That Order, the Martin court found, "sets out the evidentiary foundation for the Phase I jury's findings on [Mrs. Martin's] claims, and demonstrates that the verdict is conclusive as to the conduct elements of the claims." Martin, 53 So. 3d at 1068. The First DCA thus concluded-"unlike the Eleventh Circuit"-that "the Phase I findings establish the conduct elements of the asserted claims, and individual Engle plaintiffs need not independently prove up those elements or demonstrate the relevance of the findings to their lawsuits, assuming they assert the same claims raised in the class action." Id. at 1069.*fn9
D. Post-Martin Engle Progeny Case Management
Following the First DCA's decision, this Court granted the Defendants' unopposed request to file briefs addressing the impact of Martin on the Engle preclusion issue. (Engle Master Docket, Doc. 38.) In their initial brief, Defendants conceded that "the state appellate court opinion in Martin binds this Court on questions of state preclusion law." (Engle Master Docket, Doc. 44 at 1.) However, they disagreed with Martin's holding "as a substantive matter," and argued that "Martin does not (and cannot) conclusively answer whether the Fourteenth Amendment Due Process Clause permits . . . plaintiffs [to use] the Engle findings to establish elements of their claims [without first showing] that those precise issues were actually and necessarily determined in their favor by the Engle jury." (Id. at 1-2.)
Plaintiffs, in contrast, contended that Martin "answer[ed] the issues raised by the Eleventh Circuit in [Bernice Brown II] concerning the evidentiary basis for the preclusive findings." (Engle Master Docket, Doc. 45 at 2.) Specifically, plaintiffs noted that "[t]he Brown court stated issue preclusion under Florida law requires a showing that within reasonable certainty the Engle [Phase] I jury actually adjudicated the factual finding sought to be precluded," and argued that the Martin court had in fact found the Phase I approved findings "were grounded in the evidence and actually adjudicated." (Id. at 2, 5.) Martin thus "puts to bed any due process arguments," according to plaintiffs, because "the determination that the findings had been 'actually adjudicated' is tantamount to determining that a full and fair opportunity to litigate existed and that the minimum requirements of due process have been satisfied." (Id. at 5-6.)
On June 6, 2011, this Court held a Case Management Conference to discuss all matters related to the federal Engle progeny cases, including the preclusion issue. (Engle Master Docket, Doc. 173.) Defendants once again acknowledged that Martin's interpretation of Florida preclusion law controls, "unless this Court were to determine that following Martin would violate the Defendants' federal due process rights." (Engle Master Docket, Doc. 171 at 63.) The due process problem could be avoided altogether, Defendants contended for the first time, if the Court applied Florida preclusion law ...