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 I .

DISCUSSION

1. Philip Morris Has Shown No Error with Respect to its Liability for a

Design Defect

a. Risk-Benefit Test

A product is defective in design for purposes of tort liability if the benefits of the design do not outweigh the risk of danger inherent in the design, or if the product, used in an intended or reasonably foreseeable manner, has failed to perform as safely as an ordinary consumer would expect. (Barker v. Lull Engineering Co. (1978) 20 Cal.3d 413, 418.)

Philip Morris challenges the finding of liability for design defect based on a risk‑benefit theory by challenging the sufficiency of the evidence that a safer alternative design existed and the sufficiency of the evidence that its failure to use a safer alternative design caused Bullocks injuries. Philip Morriss argument is based on the premise that a plaintiff alleging a design defect based on a risk-benefit theory must prove that the defendant could have used a safer alternative design. The jury, however, was not so instructed. The court instructed the jury to determine whether the benefits of the design outweighed the risks by considering several factors, but did not instruct that any single factor was essential:[1]

In determining whether the benefits of the design outweigh its risks, you should consider, among other things, the gravity of the danger posed by the design, the likelihood that the danger would cause damage, the existence or nonexistence of warnings, the time of the manufacture, the financial cost of an improved design, and the adverse consequences to the product and the consumer that would result from an alternate design.

Thus, Philip Morris challenges the verdict based on a purported rule of law on which the jury was not instructed. We review the sufficiency of the evidence to support a verdict under the law stated in the instructions given, rather than under some other law on which the jury was not instructed. (Null v. City of Los Angeles (1988) 206 Cal.App.3d 1528, 1535.) Each party in a civil proceeding must request complete and comprehensive instructions on its theory of the case; if a party fails to do so, the court ordinarily has no duty to instruct on its own motion. (Agarwal v. Johnson (1979) 25 Cal.3d 932, 950-951, disapproved on another point in White v. Ultramar, Inc. (1999) 21 Cal.4th 563, 574, fn. 4; Finn v. G. D. Searle & Co. (1984) 35 Cal.3d 691, 701-702.) The jurys responsibility is to decide factual issues and return a verdict in accordance with the law as instructed by the court. (Null, supra, at p. 1534; Richmond v. Dart Industries, Inc. (1987) 196 Cal.App.3d 869, 877.) Absent instructional error, which Philip Morris does not argue, for an appellate court to review a verdict under a rule of law on which the jury was not instructed would allow reversal of a judgment on a jury verdict, requiring a retrial, even though neither the jury nor the court committed error. (Null, supra, at pp. 1534-1535.) Accordingly, we conclude that Philip Morris has shown no error with respect to the finding of liability for a design defect based on the risk-benefit test.

b. Consumer Expectations Test and Failure to Warn

Philip Morris contends the dangers of smoking cigarettes were known to the ordinary consumer before July 1, 1969, and thereafter, and the jurys finding to the contrary was not supported by substantial evidence. We disagree. The evidence of Philip Morriss extensive efforts, through various means, to mislead the public about the adverse health effects of smoking cigarettes and create a false controversy as to whether smoking caused lung cancer and other diseases, and evidence that smokers are particularly vulnerable to such manipulation, is sufficient to support the finding that the ordinary consumer was mislead and was unaware of the dangers of cigarette smoking.

2. Substantial Evidence Supports the Findings of Liability for Intentional

Misrepresentation and False Promise Verdicts

Philip Morris contends the evidence fails to establish that Bullock heard and actually relied on a false statement by Philip Morris and therefore does not support liability for intentional misrepresentation or false promise. Philip Morris cites cases holding that fraud must be alleged with particularity as support for the proposition that a plaintiff must prove that he or she actually relied on a particular statement by the defendant or by a third party repeating the substance of the defendants statement. Philip Morris contends Bullock failed to prove that she actually relied on a particular statement that was shown to be false at trial because she did not testify that she heard any of those statements.

As this record reflects, Bullock presented substantial evidence of extensive efforts by Philip Morris, sometimes in concert with other cigarette manufacturers, to mislead the public about the adverse health effects of smoking cigarettes through press releases, publications, advertising, and other means. Philip Morris sought to cast doubt on reports of adverse health effects by creating a false controversy as to whether smoking caused lung cancer and other diseases. Philip Morris, individually and through agents and trade associations, discredited the studies showing that smoking was likely a cause of serious illnesses and sought to reassure smokers that Philip Morris and other cigarette manufacturers were sponsoring research to resolve the purported controversy and that the research would be overseen by disinterested scientists.

Substantial evidence shows that contrary to those representations, Philip Morris knew that there was no valid scientific controversy concerning the adverse health effects of smoking, that it carefully avoided conducting or sponsoring research that might reveal the health hazards of smoking and concealed the results of research conducted in Germany on its behalf, and that it sought to maintain the false controversy and to make its cigarettes more addictive in order to increase sales. Philip Morris does not challenge the jurys findings that Philip Morris made one or more material misstatements of fact and false promises with the intention of inducing reliance, or the finding that Bullocks reliance was justified. Philip Morriss sole challenge to the intentional misrepresentation and false promise verdicts is that Bullock failed to prove that she actually relied on particular statements.

A plaintiff need not prove that he or she directly heard a specific misrepresentation or false promise to establish actual reliance. Rather, actual reliance is established if the defendant made a misrepresentation to a third party, the defendant intended or had reason to expect that the substance of the communication would be repeated to the plaintiff and would induce the plaintiffs reliance, and the plaintiff was misled when the substance of the communication was repeated to the plaintiff. (Mirkin v. Wasserman (1993) 5 Cal.4th 1082, 1095-1098; Boeken v. Philip Morris, Inc. (2005) 127 Cal.App.4th 1640, 1660; Whiteley v. Philip Morris, Inc., supra, 117 Cal.App.4th at pp. 680-681; see Rest.2d Torts,  533.) We therefore reject the contention that Bullock must prove that she heard and actually relied on a specific representation and conclude that Philip Morris has not shown error.

Philip Morriss selective recitation of evidence focuses on whether Bullock was a direct or indirect recipient of specific representations. Philip Morris does not discuss the evidence tending to show that Philip Morris for many years engaged in a broad‑based, public campaign to disseminate misleading information and create a false controversy concerning the adverse health effects of smoking with the intention of causing smokers and potential smokers to rely on the substance of that misinformation, and that the substance of the misinformation reached Bullock indirectly through various means and media sources and caused her to begin and to continue smoking. We need not further discuss that evidence because by failing to challenge its sufficiency and failing to discuss the issue in any meaningful way, Philip Morris waives any challenge to the sufficiency of the evidence in those regards. (Foreman & Clark Corp. v. Fallon (1971) 3 Cal.3d 875, 881; County of Solano v. Vallejo Redevelopment Agency (1999) 75 Cal.App.4th 1262, 1274.)

3. Philip Morris Has Shown No Instructional Error with Respect to

Fraudulent Concealment

Philip Morris requested an instruction pursuant to BAJI No. 12.36 stating, in pertinent part, A duty to disclose known facts arises where one party knows of material facts and also knows that such facts are neither known nor readily accessible to the other party. Bullock requested an instruction stating identical language. Philip Morris also requested an instruction pursuant to BAJI No. 12.37, stating, Intentional concealment exists where a party: [] (1) Knows of defects in a product and intentionally conceals them, or [] (2) While under no duty to speak, nevertheless does so, but does not speak honestly or makes misleading statements or suppresses facts which materially qualify those stated. Bullock requested an instruction stating only the second of the two enumerated alternatives, in language otherwise identical to the instruction requested by Philip Morris.

The court did not instruct the jury on BAJI No. 12.36, but instructed on BAJI No. 12.37 using the language requested by Philip Morris.[2] The reason for the courts failure to instruct on BAJI No. 12.36 does not appear in the appellate record. The conference on jury instructions was held in chambers and was not reported. No final set of written instructions showing the instructions given and refused appears in the record. There is no indication on either partys proposed instruction on BAJI No. 12.36 that the court refused the instruction. Philip Morris represented to the court after the jury instruction conference that it would file a document showing Philip Morriss proposed instructions refused by the court. The document later filed by Philip Morris stated that Philip Morris objected, and objects, to each and every rejection by the Court of jury instructions proposed by Philip Morris, but did not identify the instructions refused by the court. Moreover, Philip Morris did not argue in its new trial motion that the court erroneously refused to instruct on BAJI No. 12.36, so the court had no opportunity to address that argument.

The possible explanations for the courts failure to give an instruction requested by both parties include that the court concluded that the instruction was improper, that one or both parties withdrew its request for the instruction and objected to the instruction during the unrecorded conference, that the parties or the court concluded that the instruction was unnecessary, or that the court or the party who prepared the final set of instructions simply overlooked the requested instruction and mistakenly omitted it.[3] We cannot conclude from the appellate record whether one of these alternatives or some other scenario actually took place.

An appellant has the burden to provide a record sufficient to support its claim of error. (Aguilar v. Avis Rent A Car System, Inc. (1999) 21 Cal.4th 121, 132.) Absent an indication in the record that an error occurred, we must presume that there was no error. (Walling v. Kimball (1941) 17 Cal.2d 364, 373-374; Gee v. American Realty & Construction, Inc. (2002) 99 Cal.App.4th 1412, 1416.) An appellant arguing instructional error must ensure that the appellate record includes the instructions given and refused and the courts rulings on proposed instructions. (Lynch v. Birdwell (1955) 44 Cal.2d 839, 846‑847;[4]Huber, Hunt & Nichols, Inc. v. Moore (1977) 67 Cal.App.3d 278, 312.) If the record does not show which party requested an erroneous instruction, the reviewing court must presume that the appellant requested the instruction and therefore cannot complain of error. (Lynch, supra, at pp. 846-848.) Similarly, if the record does not show whether an instruction was refused or withdrawn, abandoned, or lost in the shuffle, the reviewing court must presume that the appellant withdrew the instruction. (Huber, Hunt & Nichols, supra, at p. 312.) [I]t is incumbent upon . . . appellant . . . to make certain that the trial court has ruled [on a requested instruction] and that the record on appeal discloses that ruling before the alleged ruling may be assigned as error. [Citations.] (Ibid.)

We conclude that the record is insufficient to show that the court refused the requested instruction. We presume that Philip Morris either affirmatively withdrew the instruction or omitted the instruction from the final set of instructions that Philip Morris prepared.[5] Accordingly, Philip Morris has not shown instructional error with respect to fraudulent concealment.[6]

4. Philip Morris Has Shown No Error with Respect to Preemption

a. Applicable Federal Law

The Federal Cigarette Labeling and Advertising Act (FCLAA) (15 U.S.C.  1331 et seq.) is a comprehensive federal scheme governing the advertising and promotion of cigarettes. (Lorillard Tobacco Co. v. Reilly (2001) 533 U.S. 525, 541 [121 S.Ct. 2404] (Reilly); accord, 15 U.S.C.  1331 [stating the purpose of the act to establish a comprehensive Federal program to deal with cigarette labeling and advertising with respect to any relationship between smoking and health].) The express purposes of the act are to adequately inform the public of the dangers of smoking cigarettes and to protect the national economy from the burden of diverse, nonuniform, and confusing cigarette labeling and advertising regulations with respect to any relationship between smoking and health. (15 U.S.C.  1331.)

As originally enacted in 1965 (Pub.L. No. 89‑92 (July 27, 1965) 79 Stat. 282), the FCLAA mandated warnings on cigarette packages, preserved the authority of the Federal Trade Commission (FTC) to regulate unfair or deceptive acts or practices in cigarette advertising, and included a preemption provision. The Public Health Cigarette Smoking Act of 1969 (Pub.L. No. 91-222 (Apr. 1, 1970) 84 Stat. 87) amended the FCLAA in several ways, including by strengthening the required warning and modifying the preemption provision. (Cipollone v. Liggett Group, Inc. (1992) 505 U.S. 504, 514-515 & fn. 9 [112 S.Ct. 2608] (Cipollone).)[7] The preemption provision as amended in 1969 now reads, No requirement or prohibition based on smoking and health shall be imposed under State law with respect to the advertising or promotion of any cigarettes the packages of which are labeled in conformity with the provisions of this chapter.[8](15 U.S.C.  1334(b).) A majority of the justices in Cipollone held that in light of the express preemption provisions enacted in 1965 and 1969, the scope of preemption under each provision is limited to claims expressly preempted under each provision. (Cipollone, supra, at p. 517.) Invoking a presumption against preemption of state laws based on the exercise of police powers, the Cipollone court stated that Congresss intent to preempt must be clear and manifest. (Id. at pp. 516, 518; accord, Reilly, supra, 533 U.S. at pp. 541‑542.)

A majority of the justices in Cipollone concluded that the phrase [n]o requirement or prohibition . . . imposed under State law in the current preemption provision (15 U.S.C.  1334(b)) encompasses regulation both by positive enactments and by common law rules. The plurality opinion by Justice Stevens stated with regard to requirement or prohibition: As we noted in another context, [state] regulation can be as effectively exerted through an award of damages as through some form of preventive relief. The obligation to pay compensation can be, indeed is designed to be, a potent method of governing conduct and controlling policy. [Citation.] (Cipollone, supra, 505 U.S. at p. 521 (plur. opn. of Stevens, J.).) The plurality also concluded that under State law, as used in the statute, is not limited to positive enactments. (Id. at pp. 522-523.) Justices Scalia and Thomas agreed with these points in a separate opinion. (Id. at pp. 548-549 (conc. & dis. opn. of Scalia, J.).)

A plurality of the Cipollone court held that section 1334(b) of 15 United States Code 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, at pp. 527-528 (plur. opn .of Stevens, J.).) The plurality opinion explained that a fraudulent misrepresentation claim based on such a neutralization theory is predicated on a state-law prohibition against statements in advertising and promotional materials that tend to minimize the health hazards associated with smoking. Such a prohibition, however, is merely the converse of a state-law requirement that warnings be included in advertising and promotional materials. (Id. at p. 527.) The plurality concluded that the plaintiffs fraudulent misrepresentation claim based on a neutralization theory was inextricably related to the failure to warn theory and therefore was preempted. (Id. at p. 528.)

The Cipollone plurality, however, held that section 1334(b) of 15 United States Code did not preempt the plaintiffs state law claims for fraudulent misrepresentation based on false statements of material fact made in advertising because [s]uch claims are predicated not on a duty based on smoking and health but rather on a more general obligationthe duty not to deceive. (Cipollone, supra, 505 U.S. at pp. 528-529 (plur. opn. of Stevens, J.).) The plurality also held that the act did not preempt state law claims for breach of express warranty (id. at pp. 525‑527) and conspiracy to misrepresent or conceal material facts (id. at p. 530).

The United States Supreme Court in Reilly, supra, 533 U.S. at pages 548‑551, held that section 1334(b) of 15 United States Code preempted Massachusettss regulations restricting outdoor and point-of-sale advertising of cigarettes.[9] The court concluded, Congress prohibited state cigarette advertising regulations motivated by concerns about smoking and health, and, the concern about youth exposure to cigarette advertising is intertwined with the concern about cigarette smoking and health. (Reilly, supra, at p. 548.) Reilly stated, to the extent that Congress contemplated additional targeted regulation of cigarette advertising, it vested that authority in the FTC (ibid.), and Congress enacted a comprehensive scheme to address cigarette smoking and health in advertising and pre-empted state regulation of cigarette advertising that attempts to address that same concern, even with respect to youth. (Id. at p. 571.) Reilly also stated, we hold only that the FCLAA pre-empts state regulations targeting cigarette advertising. States remain free to enact generally applicable zoning regulations, and to regulate conduct with respect to cigarette use and sales. (Id. at p. 550; see also In re Tobacco Cases II (2007) 41 Cal.4th 1257, 1271‑1275 [analyzing Cipollone and Reilly].)

b. Admission of Evidence

Philip Morris filed motions in limine before trial seeking to preclude the admission of evidence pertaining to its advertising and promotion of cigarettes after July 1, 1969. Philip Morris argued that the evidence was inadmissible to support claims preempted by the FCLAA, was relevant for no other purpose and, therefore, was inadmissible for all purposes. The court concluded that the act did not preempt Bullocks product liability claims or fraud claims based on deceptive advertising, determined that the evidence was relevant and admissible for purposes of those claims, and denied the motions. During trial, Philip Morris objected to evidence of its post‑1969 advertising on grounds of preemption. The court overruled the objections.

Philip Morris argues in its opening brief on appeal that the admission of evidence of its advertising after July 1, 1969, was error because the federal act preempts liability based on advertising that minimizes health risks or targets youths. Philip Morriss argument appears to be that such preemption made the evidence relied upon by Bullock inadmissible for all purposes. Evidence, however, may be admissible for one purpose but inadmissible for another purpose. (Evid. Code,  355.) In its opening brief, Philip Morris does not challenge the courts rulings that the evidence was admissible for purposes of Bullocks product liability claims and fraud claims based on deceptive advertising. Bullock argues in her respondents brief that the evidence was admissible for purposes other than the preempted claims and cites the courts rulings to that effect. Philip Morris argues in its reply brief that Bullock has waived the issue by failing to explain the purposes for which the evidence was admissible and argues summarily that the evidence was inadmissible for all purposes, but does not acknowledge the courts determination that the evidence was admissible to prove those claims not preempted by the FCLAA; nor does Philip Morris explain why that ruling was incorrect.

Evidence of Philip Morriss post-1969 advertising was admissible to support nonpreempted claims, including the counts for misrepresentation and false promise. Those counts were not based on smoking and health (15 U.S.C. 1334(b)) 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 preempted. Philip Morriss post-1969 advertising conveyed the message that smokers were glamorous, healthy, and carefree and supported Philip Morriss efforts to deceive smokers and potential smokers concerning the adverse health effects of smoking. Evidence of Philip Morriss post-1969 advertising therefore was probative on the intent to defraud and reliance elements of Bullocks nonpreempted fraud claims.

Because Philip Morris has not shown that evidence of its post-1969 advertising was inadmissible for all purposes and the trial court properly concluded that such evidence was admissible in support of Bullocks fraud claims, we hold that there was no error in its admission.[10]

Story continues as Part III .

Publication courtesy of California pro bono legal advice.

Analysis and review provided by La Mesa Property line Lawyers.

[1] In light of the instructions given and Philip Morriss failure to argue instructional error, we need not decide whether a product that presents a substantial risk of harm may be defective for purposes of tort liability even if no safer alternative design is feasible. (See Barker v. Lull Engineering Co., supra, 20 Cal.3d at p. 430, fn. 10.) We also need not discuss the allocation of the burden of proof on the issue of the existence of a product defect. (Id. at pp. 431‑432.)

[2] The reporters transcript indicates that in instructing the jury the court stated makes misleading statements or expresses facts which materially qualify those stated (italics added) rather than makes misleading statements or suppresses facts which materially qualify those stated (italics added). The record does not show that either party attempted to correct the apparent misstatement or that either party attempted to correct the reporters transcript.

[3] The reporters transcript shows that Philip Morris assumed responsibility for preparing the final set of instructions.

[4] As declared in Vaughn v. Jonas (1948), 31 Cal.2d 586, 596 [191 P.2d 432], in making up the record on appeal Each instruction should be identified by a number and should indicate by whom it was requested or that it was given by the court of its own motion; on each requested instruction the trial judge should endorse the fact as to whether it was given or refused or given as modified, with the modification, if any, clearly indicated. [Citation.] (Lynch v. Birdwell, supra, 44 Cal.2d at pp. 846-847.)

[5] Philip Morris encountered a similar problem and suffered a similar result in Boeken v. Philip Morris Inc., supra, 127 Cal.App.4th at pages 1671-1672.

[6] Our conclusion with respect to this claim of instructional error necessarily disposes of Philip Morriss related argument that it had no duty to disclose the fact that smoking causes lung cancer because information that smoking causes lung cancer was readily accessible to Bullock. The court never instructed the jury pursuant to BAJI No. 12.36 that a duty to disclose material facts arises only if a party knew that the facts were not readily accessible to another party, as discussed ante. Instead, the court only instructed pursuant to BAJI No. 12.37 that a party is liable for intentional concealment if the party [k]nows of defects in a product and intentionally conceals them or [w]hile under no duty to speak, nevertheless does so, but does not speak honestly or makes misleading statements or expresses [sic] facts which materially qualify those stated. In light of the instructions given, Philip Morris has shown no error. (Nullv.City of Los Angeles, supra, 206 Cal.App.3d at p. 1535.)

[7] The lead opinion in Cipollone, supra, 505 U.S. 504, by Justice Stevens was the majority opinion as to parts I through IV and a plurality opinion joined in by three other justices as to parts V and VI. Our references to parts V and VI of the opinion will indicate that we are referring to the plurality opinion.

[8] The amendment became effective on July 1, 1969. (Pub.L. No. 91‑222,  3, 84 Stat. 88.)

[9] The attorney general of Massachusetts promulgated the regulations, in the words of the regulations themselves,  to eliminate deception and unfairness in the way cigarettes and smokeless tobacco products are marketed, sold and distributed in Massachusetts in order to address the incidence of cigarette smoking and smokeless tobacco use by children under legal age . . . [and] in order to prevent access to such products by underage consumers. [Citation.] (Reilly, supra, 533 U.S. at p. 533.)

[10] Philip Morris does not argue on appeal that the evidence should have been excluded under Evidence Code section 352.