BULLOCK v. PHILIP MORRIS USA, INC

Filed 1/30/08 - opinion on remand from Supreme Court

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION THREE

Story continued from Part II .

c. The Refusal of Philip Morriss Proposed Preemption Instructions

in the First Phase of Trial Was Not Error

Philip Morris filed a set of proposed jury instructions on May 23, 2002, including an instruction on preemption.[1] Philip Morris filed a second set of Proposed Jury Instructions on August 19, 2002, including a modified preemption instruction. Philip Morris filed a set of Proposed Supplemental Preliminary Jury Instructions on August 21, 2002, including a modified version of the preemption instruction. Philip Morris filed a set of Revised Proposed Jury Instructions on August 28, 2002, expressly withdrawing the proposed instructions filed on August 19. The revised set included a preemption instruction identical to the instruction proposed on August 21.[2]

Philip Morris then filed a set of Supplemental Proposed Jury Instructions on September 24, 2002, including two modified instructions on preemption. In that final set of proposed instructions, Philip Morris stated that the court held jury instruction conferences off the record on August 29 and September 11, 18, and 19, 2002, and that the attached instructions were proposed as alternatives to instructions previously submitted by Philip Morris and rejected by the court. The conferences on instructions were unrecorded, and no final set of instructions given and refused appears in the appellate record, as we have noted. The court instructed the jury that Philip Morriss liability for fraudulent concealment and liability for failure to warn of a design defect were limited to acts and omissions prior to July 1, 1969, but did not instruct that other counts were similarly restricted.

Philip Morris contends the court erred by refusing to instruct that liability for misrepresentation and false promise could not be based on advertising after July 1, 1969, that minimized health risks or targeted youths. In its opening brief, Philip Morris quotes only the fourth sentence of its proposed instruction filed on May 23, 2002 (quoted ante in fn. 14), fails to mention its later proposed instructions, and argues without citation to the record that the court refused to give the jury any preemption instructions relating to plaintiffs misrepresentation and false promise claims. Bullock argues in her respondents brief that Philip Morris fails to cite or discuss its revised proposed instruction filed on August 28, 2002, that the instruction was argumentative and confusing and the court properly refused it, and that Philip Morris has waived any error by failing to show that the requested instruction was proper.[3] In its reply brief, Philip Morris acknowledges that the proposed instruction filed on May 23 was superseded, but argues that the proposed instruction filed on August 28 was substantially the same. Philip Morris cites the August 28 proposed instruction in its reply brief, but does not discuss it or explain why it was proper. Philip Morris does not respond to the argument that the instruction was argumentative and confusing or the argument that Philip Morris has waived any error by failing to explain why the instruction was proper.

A party is entitled to an instruction on each theory of the case that is supported by the pleadings and substantial evidence if the party requests a proper instruction. (Soule v. General Motors Corp. (1994) 8 Cal.4th 548, 572 (Soule); Munoz v. City of Union City (2004) 120 Cal.App.4th 1077, 1107-1108.) A court may refuse a proposed instruction that incorrectly states the law or is argumentative, misleading, or incomprehensible to the average juror, and ordinarily has no duty to modify a proposed instruction. (Shaw v. Pacific Greyhound Lines (1958) 50 Cal.2d 153, 158; Boeken v. Philip Morris Inc., supra, 127 Cal.App.4th at p. 1678; Munoz v. City of Union City, supra, at p. 1108; Levy-Zentner Co. v. Southern Pac. Transportation Co. (1977) 74 Cal.App.3d 762, 782.) A court may refuse a proposed instruction if other instructions given adequately cover the legal point. (Arato v. Avedon (1993) 5 Cal.4th 1172, 1185, fn. 11.) Moreover, the refusal of a proper instruction is prejudicial error only if it seems probable that the error prejudicially affected the verdict. [Citations.] (Soule, supra, at p. 580.) [W]hen deciding whether an error of instructional omission was prejudicial, the court must also evaluate (1) the state of the evidence, (2) the effect of other instructions, (3) the effect of counsels arguments, and (4) any indications by the jury itself that it was misled. [Fn. omitted.] (Id. at pp. 580‑581.)

An appealed judgment or challenged ruling is presumed correct. (Denham v. Superior Court (1970) 2 Cal.3d 557, 564; Winograd v. American Broadcasting Co. (1998) 68 Cal.App.4th 624, 632.) An appellant must affirmatively demonstrate error through reasoned argument, citation to the appellate record, and discussion of legal authority. (Guthrey v. State of California (1998) 63 Cal.App.4th 1108, 1115-1116; Kim v. Sumitomo Bank (1993) 17 Cal.App.4th 974, 979.) Accordingly, we cannot conclude that the refusal to give an instruction was error absent an adequate showing that the proposed instruction was proper. (Kritzer v. Citron (1950) 101 Cal.App.2d 33, 39.) The extent of the showing required to demonstrate error depends on the complexity of the issues presented. Philip Morriss proposed instruction of August 28, 2002, addressed complex legal issues and ran over 200 words. By failing to discuss the entire instruction and failing to explain why it was proper, Philip Morris fails to carry its burden to demonstrate error.

Moreover, the instructions given on each count obviated the need for a more general preemption instruction of the type proposed. The court instructed the jury that Philip Morriss liability for fraudulent concealment and liability for failure to warn of a design defect were limited to acts and omissions prior to July 1, 1969. The court also instructed that an essential element of the counts for negligent and intentional misrepresentation was a false representation of fact or actionable opinion, and that Philip Morris could be held liable for false promise only if it made a promise that it did not intend to perform. The counts for misrepresentation and false promise were not based on smoking and health within the meaning of the preemption provision because they were not based on either a positive enactment or a common law prohibition against statements in advertising and promotional materials that tend to minimize the health hazards associated with smoking. (Cipollone, supra, 505 U.S. at pp. 527‑528 (plur. opn. of Stevens, J.).) Rather, the counts for misrepresentation and false promise were based on false statements and a duty not to deceive and therefore were not subject to preemption. By limiting liability for failure to warn or fraudulent concealment to acts and omissions before July 1, 1969, and by requiring a finding of a misrepresentation of fact or actionable opinion or a false promise to support liability for misrepresentation or false promise, the instructions given precluded liability based on a claim that Philip Morriss advertising or promotion after July 1, 1969, either should have included additional, or more clearly stated, warnings (Cipollone, supra, 505 U.S. at p. 524 (plur. opn. of Stevens, J.)) or minimized the health hazards associated with smoking and neutralized the required warnings. We conclude that Philip Morriss requested instruction was unnecessary, that it unduly repeated and emphasized a defense, that it was verbose and confusing, and that the court properly refused it.

d. The Refusal of Philip Morriss Proposed Preemption Instructions

in the Punitive Damages Phase of Trial Was Not Error

Philip Morris proposed additional instructions on preemption in the punitive damages phase of trial. Proposed instruction II stated, You may not impose punitive damages based on defendants advertising and promotion of cigarettes after July 1, 1969 depicting cigarettes in a positive light, including depiction of smoking as enjoyable, where such advertising or promotion does not contain a specific affirmative misrepresentation of fact. Proposed instruction JJ stated, You may not impose punitive damages based on any finding that defendant attempted to direct advertising or promotion of cigarettes to underage or youth smokers. The court refused both proposed instructions on the record. Philip Morris contends the refusal of the two instructions was error.

The court instructed the jury in the first phase of trial that Philip Morriss liability for fraudulent concealment and failure to warn of a design defect was limited to acts and omissions prior to July 1, 1969, and that Philip Morris could be held liable for misrepresentation or false promise only if it misrepresented a material fact or actionable opinion or made a promise that it had no intention to perform, as stated ante. The court also instructed the jury in the second phase not to award punitive damages based on a failure to warn about the health risks of cigarettes. We conclude that those instructions adequately encompassed the rule of law stated in proposed instruction II, that liability for punitive damages could not be based on advertising or promotion after July 1, 1969, absent an affirmative misrepresentation of fact. We therefore conclude that the refusal of the proposed instruction was not error.

Proposed instruction JJ was based on Reilly, supra, 533 U.S. 525, and Cipollone, supra, 505 U.S. 504. Reilly held that the FCLAA preempted state law cigarette advertising regulations motivated by concerns about the health hazards of smoking, including regulations designed to restrict smoking by youths. (Reilly, supra, 533 U.S. at pp. 548-551.) Reilly involved positive enactments--regulations--rather than common law claims for damages and did not discuss preemption in the context of common law claims. Cipollone involved common law claims. A majority of the justices in Cipollone concluded that a common law claim is a requirement or prohibition . . . imposed under State law within the meaning of the preemption provision (15 U.S.C.  1334(b)). (Cipollone, supra, 505 U.S. at pp. 521-523 (plur. opn. of Stevens, J.); id. at pp. 548-549 (conc. & dis. opn. of Scalia, J.).) A plurality of the justices in Cipollone held that section 1334(b) preempted state law claims based on failure to warn of the health hazards of smoking to the extent the claims required a showing that the defendants advertising or promotions after 1969 should have included additional, or more clearly stated, warnings. (Cipollone, supra, 505 U.S. at p. 524 (plur. opn. of Stevens, J.).) The plurality also held that section 1334(b) preempted state law claims for fraudulent misrepresentation based on statements in advertising and promotional materials that minimized the health hazards of smoking and neutralized the required warnings. (Cipollone, supra, 505 U.S. at pp. 527‑528 (plur. opn. of Stevens, J.).) The plurality concluded that both types of claims were based on smoking and health within the meaning of section 1334(b). (Cipollone, supra, 505 U.S. at pp. 524, 527‑528 (plur. opn. of Stevens, J.).)

Proposed instruction JJ incorrectly stated the law because it precluded liability for punitive damages based on youth targeting activities that occurred before or after July 1, 1969, the effective date of the amended preemption provision (15 U.S.C.  1334(b)). Section 1334(b) preempts claims based on advertising or promotional activities only to the extent that the claims are based on activities that occurred after July 1, 1969. (Hearn v. R.J. Reynolds Tobacco Co. (D.Ariz. 2003) 279 F.Supp.2d 1096, 1110-1111; Cruz Vargas v. R.J. Reynolds Tobacco Co. (D.P.R. 2002) 218 F.Supp.2d 109, 117, affd. (1st Cir. 2003) 348 F.3d 271; see Cipollone, supra, 505 U.S. at p. 524 (plur. opn. of Stevens, J.) [held that failure to warn claims were preempted only to the extent the claims arose from post-1969 advertising or promotions].) Thus, the trial court properly refused the instruction.

Moreover, it is clear that Bullocks misrepresentation and false promise claims against Philip Morris were not based on smoking and health within the meaning of the preemption provision. Those claims were not based on either a positive enactment or a common law prohibition against statements in advertising and promotional materials that tend to minimize the health hazards associated with smoking (Cipollone, supra, 505 U.S. at pp. 527-528 (plur. opn. of Stevens, J.)). Instead, the claims were based on false statements. The court instructed the jury that Philip Morris could be held liable for misrepresentation or false promise only if it misrepresented a material fact or actionable opinion or made a promise that it had no intention to perform. With respect to the misrepresentation and false promise claims, there was no need to instruct the jury not to award punitive damages based on youth targeting in the advertising or promotion of cigarettes because those claims were not based on youth targeting and a duty based on smoking and health, but on a duty not to deceive. Therefore, apart from the reason already stated, the refusal of proposed instruction JJ was proper with respect to the counts for misrepresentation and false promise.

Finally, the court instructed the jury that Philip Morriss liability for fraudulent concealment and failure to warn of a design defect was limited to acts and omissions prior to July 1, 1969, so there was no need to instruct that those claims could not be based on advertising or promotional activities after that date that targeted youths. Again, Philip Morris has not shown error.

5. Remittitur Was a Proper Remedy for the Jurys Excessive Punitive

Damages Award

Philip Morris challenges the punitive damages award under both California law and the Fourteenth Amendment due process clause. Philip Morris contends the $28 billion punitive damages award was excessive under California law, the jury acted out of passion and prejudice, and the only appropriate remedy is a new trial. The trial court, in ruling on Philip Morriss new trial motion, determined that the amount awarded by the jury was excessive and that $28 million was an appropriate amount.

Code of Civil Procedure section 662.5, subdivision (b) authorizes a court granting a new trial motion on the ground of excessive damages to make its order subject to the condition that the motion is denied if the plaintiff consents to a reduction of the award to an amount that the court independently determines to be fair and reasonable.[4]A court exercising this authority acts as an independent trier of fact. (Ibid.; Neal v. Farmers Ins. Exchange (1978) 21 Cal.3d 910, 933.) We must affirm the courts decision if the court states adequate reasons for the decision and substantial evidence supports the decision. (Lane v. Hughes Aircraft Co. (2000) 22 Cal.4th 405, 412; Neal, supra, at pp. 931-933 & fn. 18.) [W]hen a trial court grants a new trial on the issue of excessive damages, whether or not such order is conditioned by a demand for reduction, the presumption of correctness normally accorded on appeal to the jurys verdict is replaced by a presumption in favor of the order. (Neal, supra, at p. 932.) Accordingly, the relevant amount for purposes of our review is not the amount awarded by the jury, but the reduced amount ordered by remittitur. (Hasson v. Ford Motor Co. (1982) 32 Cal.3d 388, 419.)

Code of Civil Procedure section 662.5 compels the conclusion that a new trial was not the only appropriate remedy for the excessive jury verdict. Rather, a conditional new trial order with a remittitur resulting in the denial of the new trial motion was a proper alternative remedy. We conclude, however, that a new trial to determine the amount of punitive damages is required for another reason.

6. The Refusal of Philip Morriss Proposed Instruction Prohibiting

Punishment for Harm Caused to Others Was Error

a. Due Process Limitations on Punitive Damages

The due process clause of the Fourteenth Amendment prohibits grossly excessive or arbitrary punishment of a tortfeasor and therefore limits the amount of punitive damages that a state court can award. (State Farm Mut. Automobile Ins. Co. v. Campbell(2003) 538 U.S. 408, 416-417 [123 S.Ct. 1513] (State Farm).) A court reviewing a punitive damages award under the due process clause must consider three constitutional guideposts: (1) the degree of reprehensibility of the defendants misconduct, (2) the disparity between the actual or potential harm suffered by the plaintiff and the punitive damages award, and (3) the difference between the punitive damages awarded by the jury and the civil penalties authorized or imposed in comparable cases. [Citation.] (Id. at p. 418.) The first two guideposts are appropriate for a jury to consider in determining the amount of a punitive damages award; the third guidepost is an appropriate consideration only for a reviewing court. (Century Surety Co. v. Polisso (2006) 139 Cal.App.4th 922, 959-960; cf. Philip Morris USA v. Williams (2007) __ U.S. __ [127 S.Ct. 1057, 1062, 1064] (Williams) [emphasized the need to avoid an arbitrary determination of the amount of punitive damages and the need for procedures to ensure that the jury is properly guided].)[5]

The United States Supreme Court in State Farm, supra, 538 U.S. at page 419, stated:  [T]he most important indicium of the reasonableness of a punitive damages award is the degree of reprehensibility of the defendants conduct. [BMW of North America v.] Gore [(1996)] 517 U.S. [559], 575 [116 S.Ct. 1589]. We have instructed courts to determine the reprehensibility of a defendant by considering whether: the harm caused was physical as opposed to economic; the tortious conduct evinced an indifference to or a reckless disregard of the health or safety of others; the target of the conduct had financial vulnerability; the conduct involved repeated actions or was an isolated incident; and the harm was the result of intentional malice, trickery, or deceit, or mere accident. Id., at 576-577. The existence of any one of these factors weighing in favor of a plaintiff may not be sufficient to sustain a punitive damages award; and the absence of all of them renders any award suspect. It should be presumed a plaintiff has been made whole for his injuries by compensatory damages, so punitive damages should only be awarded if the defendants culpability, after having paid compensatory damages, is so reprehensible as to warrant the imposition of further sanctions to achieve punishment or deterrence. Id., at 575.

A state generally has no legitimate concern in imposing punitive damages to punish a defendant for unlawful acts committed outside of the States jurisdiction. (State Farm, supra, 538 U.S. at p. 421.) A basic principle of federalism is that each State may make its own reasoned judgment about what conduct is permitted or proscribed within its borders, and each State alone can determine what measure of punishment, if any, to impose on a defendant who acts within its jurisdiction. [Citation.] (Id. at p. 422.) Moreover, [a] defendant should be punished for the conduct that harmed the plaintiff, not for being an unsavory individual or business. Due process does not permit courts, in the calculation of punitive damages, to adjudicate the merits of other parties hypothetical claims against a defendant under the guise of the reprehensibility analysis . . . .  Punishment on these bases creates the possibility of multiple punitive damages awards for the same conduct . . . .[6] (Id. at pp. 423.) This does not mean, however, that the defendants similar wrongful conduct toward others should not be considered in determining the amount of punitive damages. (Johnson v. Ford Motor Co. (2005) 35 Cal.4th 1191, 1206-1208 & fn. 6 (Johnson).)

Story continues as Part IV .

Publication courtesy of California pro bono legal advice.

Analysis and review provided by La Mesa Property line Lawyers.

[1] The proposed instruction stated in relevant part, Federal law also limits claims based on advertising and promotion of cigarettes after July 1, 1969. With one exception that I will tell you about, you cannot find liability or award damages based on any claim that the advertising or promotion of cigarettes was wrongful or inappropriate after July 1, 1969. You cannot find liability or award damages based on any claim that the effect of the required warnings was neutralized, diminished or undermined by the imagery or implied messages contained in advertising or promotion of cigarettes after July 1, 1969. You cannot find liability or award damages based on a claim that advertising or promotion of cigarettes was targeted or directed at underage youth after July 1, 1969. [] There is one exception to the rule that liability or damages cannot be based on advertising or promotion of cigarettes. Federal law does not limit a claim that advertising or promotion of cigarettes contains a false statement of fact.

[2] The instruction proposed on August 28, 2002, stated, Federal law limits the claims that plaintiff can make in this case. The United States Congress has required that tobacco companies, including defendant Philip Morris, put specific warning labels on every pack of cigarettes sold in the United States since 1966, and on brand advertisements for its cigarettes since 1971. [] The law also says that, since July 1, 1969, the required warnings are legally sufficient to warn the public, including smokers, of any harmful effects of smoking, including addiction. That means that you cannot find liability, award damages or punish the defendant in this case based on any claim that, after July 1, 1969: [] Philip Morris should have provided more or different information to the public about the health risks of smoking or the addictive nature of smoking. []  Philip Morris concealed or suppressed information about the health risks of smoking or the addictive nature of smoking. [] Philip Morris advertising or promotion of cigarettes was wrongful or inappropriate after July 1, 1969. [] There is one exception to the rule that liability or damages cannot be based on advertising or promotion of cigarettes after July 1, 1969. Federal law does not limit a claim that advertising or promotion of cigarettes contains a false statement of fact.

[3] Bullock acknowledges that the court refused the proposed instruction filed on August 28, 2002. The proposed instruction bears the handwritten notation refused.

[4] In any civil action where after trial by jury an order granting a new trial limited to the issue of damages would be proper, the trial court may in its discretion: [] . . . [] (b)  If the ground for granting a new trial is excessive damages, make its order granting the new trial subject to the condition that the motion for a new trial is denied if the party in whose favor the verdict has been rendered consents to a reduction of so much thereof as the court in its independent judgment determines from the evidence to be fair and reasonable. (Code Civ. Proc.,  662.5.)

[5] Under California law, a punitive damages award must be based on three factors: (1) the reprehensibility of the defendants conduct; (2) the amount of compensatory damages awarded to or actual harm suffered by the plaintiff; and (3) the defendants financial condition. (Adams v. Murakami (1991) 54 Cal.3d 105, 110; Neal v. Farmers Ins. Exchange, supra, 21 Cal.3d at p. 928.) [T]he defendants financial condition remains a legitimate consideration in setting punitive damages after State Farm, supra, 538 U.S. 408, and Gore, supra, 517 U.S. 559. (Simon v. San Paolo U.S. Holding Co., Inc. (2005) 35 Cal.4th 1159, 1185.)

[6]State Farm held that the Utah courts erred by awarding punitive damages based on the defendants dissimilar acts that had nothing to do with the conduct that injured the plaintiffs. (State Farm, supra, 538 U.S. at pp. 422-423.)