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Research Memorandum
August 1995 No. 9


Prohibitionism Goes To Court

After downing several shots of whiskey, a career criminal craves a cigarette but finds his pack empty. He arrives at the local convenience store only to find it closing for the night. Maddened by the nicotine urge, he pulls a handgun and orders the clerk to reopen the store, then shoots him when he resists.

Alert attorneys will immediately wonder about this violent episode: how many deep pockets are responsible? Aside from the convenience store, which should have heeded its clerk’s safety by closing earlier or hiring a guard, three product liability claims come to mind: against the handgun maker, which knew some of its products would fall into criminal hands; the whiskey distiller, which put into the stream of commerce a product it knew loosened inhibitions; and, of course, the cigarette company, whose products in normal use often lead to bodily harm (though seldom by the route imagined here).

In fact, these three legal claims bear a family resemblance to each other. They typify arguments made in courts around the country over the last few decades — not, thus far, with much success, though strenuous efforts are afoot to change that. Plaintiffs have sought to hold makers of alcohol, tobacco and firearms legally responsible for injuries and social harms that might have been avoided had their products not been on the market, ranging from the deaths of chug-a-lug college drinkers to fatalities in house fires started by drowsy smokers. America’s trial lawyers are setting up shop as a private, bounty-driven counterpart to the Bureau of Alcohol, Tobacco and Firearms (BATF).

The hallmark of these suits is that the products in question are operating precisely as intended and commonly expected. Not only are the qualities and features that give rise to the suits well known, they are often the very reason customers buy the product. If whiskey failed to produce an alcohol buzz, if a cigarette failed to satisfy the urge for a cigarette, if a handgun jammed and failed to eject a bullet, outraged customers would demand their money back (and, under traditional legal principles, be entitled to get it). But meeting consumer expectations is not enough to ward off lawsuits, and may be enough to provoke them.

Now legal action against these manufacturers may be entering a new phase. The tobacco industry faces litigation more formidable than any it has seen before, including huge class actions and suits by state governments, accompanied by sophisticated publicity efforts. The legal groundwork is being laid for a massive assault on gun makers as well, and renewed attacks on producers of alcoholic beverages may be only a matter of time and logical extension. If successful, and perhaps even if not, these lawsuits threaten to impose ruinous costs on the targeted industries, raising the prices of their products dramatically, if not driving them from the legal market entirely. On the surface, these are claims for compensation; one level down, they may amount to efforts at de facto prohibition.

Advocates of firearms liability have not overlooked this possibility. “It is true that I would not be disappointed if all the handgun companies suddenly decided to devote their resources to making kinder, gentler products,” writes Andrew Jay McClurg1, a law professor at the University of Arkansas at Little Rock, who nonetheless maintains that “shutting down the nation’s handgun industry is not the inevitable consequence of imposing strict liability upon handgun manufacturers.” It would mean only that “the price of handguns would rise to reflect their true cost to society.” Given McClurg’s premise that the “true cost” of handguns far outweighs their utility, however, this seems a distinction without a difference.

Similarly, the District of Columbia’s Assault Weapons Manufacturing Strict Liability Act, approved by referendum in 1991, was drawn up with ambitious prohibitionist goals in mind. The law makes manufacturers and sellers liable for injuries of victims shot by certain semiautomatic firearms — “assault weapons” — even when the sale was entirely legal and no negligence was shown. The National Law Journal2 reported that “District Council Chairman, David Clarke, the law’s architect, says the real goal is to kill the sale of these weapons throughout the country.” Another council member explained, “If gun manufacturers are in the business because they are making money, if dealers are in the business because of making money, then what they need to experience is suits brought against them under a strict liability statute, and maybe they will decide that their best bottom-line interest is not to manufacture and sell guns.”3

It appears that no lawsuits have been brought under the D.C. liability act yet, and Congress may repeal it. But in April a California court ruled that the relatives of people killed in a shooting spree at a San Francisco law office in 1993 may sue the manufacturers of two “assault pistols” used in the attack, the maker of the magazines carried by the guns, and a pawn shop that sold one of the pistols.4 The plaintiffs argue that the gun in question, the TEC-DC9, has no legitimate use.

Although many lawsuits have attempted to impose liability without defect on gun suppliers, only one other American court has accepted this approach so far. In 1985 the Maryland Court of Appeals ruled that makers of small, inexpensive handguns (“Saturday night specials”) can be held liable when their products are used to commit crimes.5 According to the Associated Press, “the decision was hailed by gun foes as a major victory in their protracted battle to halt the sale of handguns in the United States.”6 The state legislature later overturned the decision.

Lawsuits claiming negligence on the part of gun dealers have been more successful. In 1989 a Philadelphia jury found a gun dealer partly responsible for an accidental shooting because it failed to provide instructions on how to use a .25-caliber pistol properly. Under Pennsylvania law, the plaintiff was allowed to seek the full $11.3-million award from the dealer (who, unlike the other defendants, had liability insurance), even though the dealer was deemed only 30 percent liable for the accident.7 In 1992 a jury ordered a Virginia gun dealer to pay $100,000 in damages for selling a pistol to a man who was openly buying it for his 15-year-old cousin. The teenager later used the weapon to kill a teacher.8 This year an Ohio jury found a gun show partly responsible for a shooting involving two teenagers who stole three handguns from a dealer at the show. The plaintiff argued that the gun show should have provided better security. Since the teenagers have no assets, the gun show is on the hook for the full $760,000 award.9

Cases of this sort fall a good distance short of the sweeping liability advocated by gun-control activists, since they do require plaintiffs to allege some sort of negligence. But as suppliers of other products have learned, negligence premised on acts of omission such as failing to provide proper instructions, warnings or security is easy to allege and hard to disprove with enough finality to avoid trial.

The track record for alcohol liability litigation has been similar: attempts to hold manufacturers strictly liable have generally failed, but claims against allegedly negligent retailers have often succeeded. Lawsuits against manufacturers have focused on accidents, acute alcohol poisoning, fetal alcohol syndrome and diseases associated with long-term consumption. With few exceptions, courts have found that manufacturers cannot be held liable for failing to warn consumers of the well-known hazards of alcohol.

This is hardly surprising, since the Restatement (Second) of Torts, the model for product-liability law in most states, says “a seller is not required to warn with respect to products, or ingredients in them, which are only dangerous, or potentially so, when consumed in excessive quantity, or over a long period of time, when the danger . . . is generally known and recognized.” It cites alcoholic beverages as an example. Furthermore, in defining an “unreasonably dangerous” product, the Restatement notes that “good whiskey is not unreasonably dangerous merely because it will make some people drunk, and is especially dangerous to alcoholics.”

Despite this explicit language, a few courts have ruled that the Restatement does not necessarily preclude failure-to-warn claims against distillers and brewers. In 1987 the U.S. Court of Appeals for the Third Circuit held that a jury should be allowed to determine whether the risks of prolonged but relatively moderate consumption of beer are in fact “generally known.”10 In 1988, citing the Third Circuit’s decision, the Court of Appeals of Texas ruled that it was up to a jury to decide whether a tequila maker had a duty to warn consumers about the danger of alcohol poisoning.11 But in general, the courts have held that consumers can reasonably be expected to know about the risks of drinking, an assumption reinforced by the federal warning labels that have appeared on beer, wine, and liquor containers since 1989.

As in the case of firearms, however, courts are less reluctant to hold retailers responsible for their customers’ behavior. In most states, either by statute or under common law, tavern owners can be held liable for serving inebriated people who later injure themselves or others. Juries became more receptive to this sort of lawsuit in the early 1980s, mainly due to heightened concerns about drunk driving. As the number of lawsuits multiplied, the cost of liability insurance for taverns, clubs, and restaurants soared.12

Unlike firearm and alcohol litigation, tobacco liability suits have not produced a single clear-cut plaintiff victory. After four decades and more than 300 suits, tobacco companies have never had to pay a cent for injuries associated with smoking. To recover damages, plaintiffs have to prove causation, which is difficult in any single case, and overcome the argument that smokers voluntarily assume the risks involved in smoking. Furthermore, the federal courts have held that tobacco companies are shielded from failure-to-warn claims arising after Congress started requiring warning labels on cigarettes.

The closest thing to a tobacco-liability victory came in Cipollone v. Liggett Group Inc. Although it concluded that Rose Cipollone was mainly responsible for her fate, a federal jury found that the Liggett Group had failed to warn about the risks of smoking before 1966 (when warning labels were first required) and had in fact implied in its advertisements that its cigarettes were safe. The jury ordered the company to pay Cipollone’s husband $400,000, an award that was overturned by the U.S. Court of Appeals for the Third Circuit. The appeals court ordered a new trial (to determine whether Rose Cipollone had actually relied on Liggett’s advertisements) and reaffirmed that post-1966 claims would be barred. The Cipollone family challenged that aspect of the decision before the U.S. Supreme Court, which in 1992 ruled that federal warning-label legislation does not prevent plaintiffs from suing cigarette companies for deceiving the public about the hazards of smoking.13

Although The New York Times14 reported that Cipollone “opened the door wide to damage suits by smokers,” its impact has so far been modest. The Cipollone family did not pursue the case, so there was never a second trial. And product-liability experts doubt that the decision will be of much help to other plaintiffs. “It raises false hopes on the part of people who expect to have claims,” observed Cornell law professor James Henderson15, “because proving its requirements¾that there be active misrepresentations or knowing concealment of facts on the part of manufacturers¾will be tough stuff when it comes down to it.”

Instead of Cipollone clones, the tobacco industry faces a new wave of highly organized class actions. A consortium of 60 law firms has filed what is billed as the largest class-action suit in U.S. history, Castano v. American Tobacco Company, on behalf of “all nicotine dependent persons in the United States,” their survivors, or their estates. The total size of this class is uncertain; estimates range from 50 million to 100 million people. The suit charges that tobacco companies have manipulated nicotine levels to keep smokers hooked while concealing the addictive nature of cigarettes. A federal judge in New Orleans has certified the class, and the discovery process is expected to drag on for years. Another class-action suit, filed by attorneys claiming to represent only 60,000 or so plaintiffs, is seeking damages from major cigarette manufacturers on behalf of flight attendants allegedly injured by exposure to secondhand smoke in cabins. (Individual plaintiffs have filed at least two other lawsuits alleging secondhand-smoke injuries.)16

Meanwhile, Florida, Minnesota, Mississippi, and West Virginia are demanding compensation from tobacco companies for the costs of treating smoking-related diseases under Medicaid. Last year the Florida legislature passed legislation designed to ensure that the government would prevail in such a suit. Under the 1994 Amendments to the Medicaid Third-Party Liability Act, the state need not prove that smoking actually caused any of the diseases it paid to treat, and the tobacco companies will not be allowed to defend themselves by arguing that Floridians voluntarily chose to smoke. “The state does not buy that package of tobacco, so we don’t read the warning on the side,” Governor Lawton Chiles explained.17

Written by a group of trial lawyers, the Florida law was passed without debate by legislators who, later accounts suggest, did not realize what they were voting for.18 It is worded so broadly that it could apply to the manufacturer of any product that contributes to disease or injury. After the law was publicized, it prompted an uproar from worried business people and legislators who felt they had been duped. In June, Chiles vetoed the legislature’s attempt at repeal.

The suits still have to overcome major obstacles. On June 28, a Florida judge found that the 1994 Amendments to the Medicaid Third-Party Liability Act impermissibly infringe on the authority of the judiciary¾inter alia, by dictating how injured Medicaid recipients should be identified and how common-law theories of recovery should be interpreted. And he said the amendments to the liability law apply only to claims arising from conduct occurring after July 1, 1994, when the amendments took effect. (On the other hand, the judge rejected a due-process challenge and upheld the provisions dealing with causation and statistical evidence.)19

To recover damages in the class-action cases, the plaintiffs will have to show not only industry wrongdoing but also its relationship to the actual injuries of particular individuals. It will be especially hard to prove causation in the secondhand-smoke case, while Castano relies on the notion that tobacco addiction overrides free will, which juries have not found persuasive in the past. Still, the prospect of billions in awards is attracting big guns and will encourage persistence. “Our biggest motivation is money,” the lead attorney in Castano told the New York Times,20 while another proudly called himself “a pirate” and “an ambulance chaser.”

The litigators may be after money, but the people cheering them on have other goals. “Massive damage awards and looming liability can drive up the price of cigarettes and drive down consumption, addiction and disease,” writes Ahron Leichtman, executive director of Citizens for a Tobacco-Free Society. “Where proper regulation has been thwarted by the tobacco lobby, the courts can promote health and serve the public interest.”21

As legislative fights over gun control have shown, direct attempts to ban controversial products often provoke fierce and successful resistance from affected consumers. Tort actions allow critics of such products to circumvent this chancy legislative process. In a critique of liability without defect,22 Henderson and a co-author note that such an approach substitutes the judgments of juries for the tastes and preferences of individuals expressed in the marketplace. “Those who would prohibit outright or, via a crushing liability, tax the routine commercial distribution of unavoidably unsafe products,” they write, “may be reacting not so much to society’s ignorance of the risks as to society’s indifference to them.”

The liability assaults on the gun, alcohol, and tobacco industries also distract attention from the crucial choices that can lead to injury and death. Holding firearm suppliers responsible for shooting accidents, distillers for alcohol poisoning, and cigarette companies for lung cancer makes it harder to insist that individuals be accountable for the risks they take. Such finger pointing reduces adults to the level of small children, who try to evade responsibility for their actions by blaming inanimate objects. The difference is that adults are starting to get away with it.

--Jacob Sullum, senior editor at Reason magazine, is working on a book about the anti-smoking movement for the Free Press.

Notes

  1. University of Arkansas at Little Rock Law Journal, Summer 1991, 13:4, pp. 618-619.
  2. December 31, 1990-January 7, 1991, p. 5.
  3. The Gun Owners (newsletter published by Gun Owners of America, Springfield, Va.),  January/February 1992, 11:1, p. 1.
  4. The Washington Post, April 11, 1995, p. A6.
  5. Kelly v. R.G. Industries, 497 A.2d 1143.
  6. The Boston Globe, October 4, 1985, p. 3.
  7. The Philadelphia Inquirer, May 26, 1989, p. C16.
  8. Trial, November 1993, p. 24.
  9. The Wall Street Journal, May 18, 1995, p. B8.
  10. Hon v. Stroh Brewery, 835 F.2d 510.
  11. Brune v. Brown Forman Corp., 758 S.W.2d 827.
  12. The Philadelphia Inquirer, March 24, 1985, p. B1; The Boston Globe, December 27, 1985,    p. 41.
  13. 112 S. Ct. 2608.
  14. June 6, 1992, p. 1.
  15. Cornell ’92 (newsletter published by Cornell University, Ithaca, N.Y.), Summer 1992.
  16. American Journal of Trial Advocacy, Spring 1994, 17, pp. 687-691.
  17. The New York Times, May 27, 1994, p. 1.
  18. St. Petersburg Times, March 7, 1995, p. 1B.
  19. Final Order and Declaratory Judgment, Associated Industries v. State of Florida, Case #94-3128, Circuit Court of the Second Judicial Circuit, Leon County, Florida.
  20. February 24, 1995, p. D14.
  21. Saint Louis University Public Law Review, 1994, 13, p. 738.
  22. New York University Law Review, November 1991, 66:5, pp. 1263-1331.


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SUMMARY:
After downing several shots of whiskey, a career criminal craves a cigarette but finds his pack empty. He arrives at the local convenience store only to find it closing for the night. Maddened by the nicotine urge, he pulls a handgun and orders the clerk to reopen the store, then shoots him when he resists.

 


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