Chapter 33, Part 1

By Frank Tursi, Susan E. White and Steve McQuilkin
JOURNAL REPORTERS
© 1999 Winston-Salem Journal

Don Garner, a law-school professor at Southern Illinois University, once called it a ''striking irony.''

''The industry that markets the most dangerous product sold in America is the only industry that has been completely sheltered from the storm of 20th century product liability,'' he said. (The Washington Post footnote, Garner quotes.)

The R.J. Reynolds Tobacco Co. was once the largest cigarette company in the United States with a powerhouse of best-selling brands: Winston, Salem and Camel. But times changed, and as the case against smoking became more pronounced in the 1960s, RJR failed to adapt to the marketplace. Its rivals would eventually rush past it, and RJR's efforts to catch up would have a profound impact on the company and the cigarette industry.

By the mid-1990s, however, the tobacco industry was spinning in a legal cyclone. The nation's attorneys general were lining up to sue for Medicaid reimbursement while, at the same time, an army of savvy plaintiffs' lawyers were filing class-action lawsuits accusing the industry of hiding the addictive nature of nicotine and hooking generations of smokers.

The lawyers filing these suits were a new breed, nothing like the solo practitioners the industry had faced in the previous 40 years. This new league of trial attorneys had money and prestige, and they could get just as much support on Capitol Hill as the tobacco industry. But they also approached the litigation for different reasons than their predecessors.

Though many of the lawyers portrayed themselves as ''selfless angels'' out to destroy an evil empire, ultimately they all appeared to be motivated by the same thing.

''It's the money,'' said Wall Street analyst Gary Black. ''The tobacco industry is the plumpest, juiciest, golden-egg layer of all time.'' (Pringle footnote, account of the Castano lawsuit.)

Some of the hungriest lawyers banded together in 1994 and threatened the industry with the largest product-liability lawsuit ever filed in America. Castano vs. American Tobacco Co. et al., a federal class-action case involving 90 million plaintiffs, was filed in March, just two months before Mississippi sued. New Orleans attorney Wendell Gauthier, one of the country's top mass-injury lawyers, led the case. Attorneys from some of the nation's most powerful law firms also agreed to help and put up $6 million to finance the case. Castano would ultimately bring Gauthier and his team of lawyers to the bargaining table with the states' attorneys general and the tobacco industry in 1997. (The Washington Post footnote, Garner quotes.)

For Gauthier, the class-action was the most personal suit he had ever undertaken. He filed the case on behalf of his best friend, Peter Castano, a Louisiana criminal defense lawyer who died of lung cancer in 1993 at age 47. He had been a chain smoker most of his adult life.

Relaxing in the Polo Lounge at New Orleans' Windsor Court Hotel, Gauthier, known as ''Goat'' to his close friends (his name is pronounced Goat-chay), speaks almost reverently of Castano today. The two met in the tuition line at New Orleans' Loyola University.

''We didn't like each other at first,'' said Gauthier. ''He was a '60s kid. . . with long hair. I was a football kid with a crew cut who liked to hunt.''

Yet the two quickly bonded, partly because of their differences.

Castano was a tough kid from New York. Gauthier was a Southern boy who used to milk cows every morning on his family's five-acre farm in Iota, La. Each figured that he could learn a lot from the other.

By the mid-1980s, Castano was representing many clients pro bono, while Gauthier was becoming a legal phenomenon. In 1982, he won $10.1 million from the crash of Pan Am flight 759, which went down in a Kenner, La. neighborhood, killing 150. At the time, the verdict was the largest single award in an airplane-crash case. In 1986, he helped negotiate the $220 million settlement for the fire that killed 96 people at San Juan's DuPont Plaza Hotel.

These lawsuits have made Gauthier a wealthy man and, like many wealthy people, he exudes confidence. But he was hardly sure of himself the day Castano's wife, Dianne, approached him about a lawsuit.

Mounting an Assault

Dianne Castano had just buried her husband. It was the second time in her life that someone she loved had died of cancer. Her father, also an addicted smoker, was the first.

The day of Peter's funeral, Dianne was livid. She wanted the industry to suffer as she had; she wanted to sue. ''She said, `This is outrageous.' They killed my dad, and now they've killed my husband. I have to do something,'' Gauthier recalled.

But Gauthier couldn't help; he couldn't take the risk. The tobacco industry had been too successful in breaking plaintiffs' lawyers. Then in February 1994, ABC's Day One aired a report on ''spiking'' cigarettes. The report, called ''Smoke Screen,'' was shown a few days after Dr. David Kessler, the commissioner of the federal Food and Drug Administration, announced that he was investigating the tobacco companies on claims that they had manipulated nicotine to addict smokers.

Gauthier was startled, particularly at the companies' response. One industry official, who was identified only as a former manager for R.J. Reynolds, talked about how the companies had the know-how to add or subtract nicotine from tobacco. (Pringle footnote, quote from former R.J. Reynolds manager.)

Reynolds later ran full-page ads adamantly denying that the company ''spiked'' its cigarettes, and it joined Philip Morris in a lawsuit against ABC over the report, forcing the network to issue an apology. But the damage was done.

Despite the industry's denials, Gauthier was determined to prove that the companies intentionally hooked smokers. He was certain that Peter Castano had died an addict. ''I thought, forget about cancer. Forget about emphysema. The cause of action is 20 and 30 years of addiction. They say it's not addicting, so let's prove that it's addicting.''

Instead of seeking damages for personal injuries such as cancer, heart disease or other health problems caused by smoking, Gauthier decided to sue for problems resulting from addiction, such as mental distress, the cost of nicotine patches and of attending smoking-cessation classes.

An addiction-only lawsuit for one smoker wasn't worth much in damages because the industry wasn't being accused of killing the smoker or causing his health problems. However, a class-action on behalf of millions of addicted smokers, such as Peter Castano, could reap billions of dollars. After little persuasion, 65 lawyers agreed to help Gauthier.

The industry immediately blasted the class action as a greedy attempt by plaintiffs' lawyers to bankrupt the tobacco companies. It was obvious, tobacco lawyers charged, that the team of attorneys Gauthier had assembled were in it for the money.

There were guys such as Melvin Belli, the flamboyant San Francisco lawyer who made a fortune off mass disasters and such product manufacturers as breast-implant companies; Washington attorney John Coale, the ''Wizard of Bhopal,'' who won more than $200 million representing 60,000 clients after the 1984 Union Carbide chemical explosion in Bhopal, India; and Charleston's Ron Motley, a millionaire lawyer who won or settled dozens of cases against the asbestos industry in the 1970s and '80s.

With so many attorneys, clashes were bound to happen, but Gauthier let them battle it out. As long as the lawyers were united in breaking the tobacco industry, that's all that mattered. ''When I filed this lawsuit, I wanted to put them out of business. I wanted to crush them,'' said Gauthier, furrowing his brow. ''I wanted to wrap my hands around tobacco's neck. The only thing I thought was we've got to litigate them to death. We have to do to them what they've done to us (plaintiffs' lawyers) for years. We have to bankrupt the sons o' bitches.''

Gauthier caught a lucky break in March 1996, when Liggett Group Inc. decided to settle Medicaid lawsuits with five states and with the Castano group.

Shortly thereafter, however, the 5th Circuit U.S. Court of Appeals for the Fifth Circuit dismissed Castano, calling it too unwieldy. But Castano's lawyers immediately filed new class actions or ''Baby Castanos'' in as many states as possible, again relentlessly pursuing the cigarette industry. For these trial attorneys, there was no giving up.

Winning on Appeal

Norwood ''Woody'' Wilner is probably one of the few people who weren't surprised by the number of damaging documents coming out of the tobacco industy's files in the 1990s. Wilner, a Jacksonville, Fla., trial attorney, had spent years defending the asbestos industry before he started suing the tobacco companies. And like tobacco, the asbestos companies had a habit of holding onto everything.

At the time, none of the documents seemed more damning than those leaked from Brown & Williamson. Not only were there indications that the company knew about the addictiveness of nicotine, other documents showed that Brown & Williamson had targeted underage smokers and underscored the role of lawyers within the company. Over the years, that role had extended into practically every department.

In other cases, similar documents were turning up from some of the other cigarette companies, many of which detailed the role of lawyers in guiding the industry's research into smoking and health.

''I don't think there was any question that we were regarded as an interference in their (researchers') daily life,'' a former RJR lawyer said. ''That's not unusual in any large corporation because it's our job to make people stick to the rules. It's our job to make sure the words used accurately reflect the proper balance of truth and concern and so forth.'' This job was referred to as ''wordsmithing,'' the lawyer said.

''And that's often easily misunderstood, meaning we're trying to control everybody's life. To a degree, I suppose they're correct, but you've got to put it into context. That comes into play when you start thinking about 'Is that tantamount to where you start telling them what to do? Is that tantamount to telling them what not to do?' Well, sure in a way. But you have to put it into context because there are rules to follow and you have to make sure the rules are properly reflected in the words you use.''

Wilner got hold of the Brown & Williamson documents for a lawsuit he filed on behalf of Grady Carter, who lost part of his lung after smoking Lucky Strikes most of his adult life (B&W had bought American Tobacco, the maker of Lucky Strikes, in 1995.). From Wilner's perspective, there was ample evidence showing that Brown & Williamson lawyers had labeled some in-house research as attorney-client privilege so that it would be protected from lawsuits. There was also proof that the company was aware that its products were addictive.

Yet, Wilner knew that it wasn't enough to exonerate his client from responsibility for his disease, and he acknowledged as much to the jury. Wilner said that Carter should have known better than to smoke. It was unusual, but it also hindered the industry from blaming Carter.

Florida law said that the manufacturer of a product was primarily responsible for warning consumers about any hazards that weren't obvious or well-known. Wilner argued that Brown & Williamson had failed to warn Carter of the dangers of smoking before warning labels went on cigarette packs in 1966. ''Brown & Williamson has a debt to pay, and it's time they paid it,'' Wilner said. (Pringle footnote, Wilner quote.)

On Aug. 9, 1996, the jury agreed. After deliberating for more than a day, the jurors awarded Grady Carter and his wife $750,000 in damages. The tobacco company, they said, was negligent in selling Carter an ''unreasonably dangerous and defective product.''

It was only the third time that a plaintiff had been awarded damages in a tobacco-liability case. The first was in 1994 when a New Jersey jury awarded $400,000 to the family of Rose Cipollone; the award was later overturned. Then a California smoker was awarded nearly $2 million after a jury agreed that the plaintiff's lung cancer had resulted from the asbestos fibers in the Micronite filters of Kent cigarettes. However, the lawsuit was based on the dangers of asbestos and not tobacco.

Wilner showed that the cigarette industry could still be beaten. Immediately after the jury verdict, tobacco stocks plummeted. Philip Morris dropped 14 percent, and RJR fell 13 percent. All told, the cigarette companies' stock lost $14 billion in a matter of hours.

''I think it (the Carter case) was very important in terms of validating tobacco litigation,'' said Richard Daynard, who heads the Tobacco Products Liability Project in Boston. ''It validated it in the mindset of tobacco executives and certainly in the minds of others that these cases are real. They could win and that real jurors, given the right set of facts, are going to hold the companies liable.''

Wilner would strike again. In June 1998, another Florida jury ruled that Brown & Williamson was liable for the death of Roland Maddox, a smoker for nearly 50 years. Maddox's brand of choice was also Lucky Strike. His family received nearly $1 million, including $450,000 in punitive damages.

The victories would be short-lived. In August 1998, a Florida appeals court overturned the Carter verdict, ruling that the lawsuit was not filed within a reasonable amount of time. The appellate court said that Carter missed meeting Florida's four-year statute of limitations by six days. More important, from the industry's standpoint, the court ruled that Wilner had no right to the tobacco memos, which were supposed to be protected under attorney-client privilege. Without the documents, the court said Wilner had not proved his case.

Wilner would also lose the Maddox verdict, which was reversed on appeal in February 1999. The appellate court said that the case should have been tried in south Florida near Maddox's home and not in Jacksonville, more than 275 miles away.

Despite his losses, Wilner refused to drop the hundreds of other smoking lawsuits that he had already filed. He even boasted that he was prepared to file thousands more. Sooner or later, the industry was going to lose, Wilner said.

''They're going down. If not this time, next time. If not next time, the time after that.''

• Coming Friday: Lifting the veil