[Intl-tobacco] Snuffed Out: Venezuela Loses Lawsuit Bid in Florida

[Robert Weissman]

November 4, 2002
Snuffed Out
Matthew Haggman
Miami Daily Business Review

The legal options of foreign governments seeking to hold tobacco companies
responsible for the costs of treating sick smokers are quickly narrowing.
The latest constriction came from Florida's 3rd District Court of Appeal,
which effectively closed the state's courts to such lawsuits.

In affirming the dismissal of a case brought by Venezuela in Miami-Dade
Circuit Court, the appeals court apparently undercut more than 20 other
suits brought by foreign governments seeking repayment from tobacco
companies such as Philip Morris, Brown & Williamson and Lorillard.

The 3rd District Court of Appeal dismissed Venezuela's case on the grounds
that its claims were too remote and indirect. The court held that, if there
was harm, it was not the country that was damaged.

Other foreign governments that filed suit in Miami-Dade Circuit Court with
similar claims include Honduras, Tajikistan, the Russian Federation and
several states in Brazil.

Joel S. Perwin, a partner with Podhurst, Orseck, Josefsberg, Eaton, Meadow,
Olin & Perwin in Miami, which filed the suits in Miami-Dade Circuit
Court on
behalf of the foreign governments, said his clients will appeal to the
Florida Supreme Court.

But getting review before the high court will be no small task. Unlike most
states, the Florida Supreme Court does not have the power to hear any case
it chooses. Appeals instead must meet specific standards. In this case,
Perwin said, he must demonstrate that there is conflict between the 3rd
District Court of Appeal ruling and another district court of appeal.

The tobacco companies underplayed Perwin's prospect of success.

"Federal courts in this country have uniformly rejected such lawsuits.
Because similar rules apply regardless of where these cases are filed or who
files them, these cases should be dismissed whether they are filed in state
or federal court," said William S. Ohlemeyer, vice president and general
counsel of Philip Morris.

In oral argument before the 3rd District Court of Appeal, Perwin argued on
behalf of Venezuela and Stephen N. Zack, of Boies, Schiller & Flexner in
Miami, argued for the tobacco companies. Zack did not return telephone calls
for comment.

The court of appeal affirmed a ruling in November 2001 by Miami-Dade Circuit
Court Judge Bernard S. Shapiro in which he dismissed the case on the grounds
of remoteness.

The three District Court of Appeal judges were Alan R. Schwartz, David M.
Gersten and Rodolfo Sorondo Jr. Sorondo has since gone into private
practice. The panel's decision was handed down Sept. 30.

The foreign governments were trying to follow the success of U.S. states
such as Mississippi and Florida, which sued tobacco companies in the late
'90s to recover money spent treating sick smokers. In November 1998, tobacco
companies settled claims by 46 states and agreed to pay more than $200
billion to those states for the next 25 years.

But, unlike the state lawsuits, foreign governments have received a hostile
reception in U.S. courts.

Last year, the U.S. Court of Appeals for the D.C. Circuit dismissed claims
made under federal law by Guatemala, Nicaragua and the Ukraine. Because the
foreign government cases were sent to the D.C. Circuit under federal
multidistrict litigation rules, the decision effectively closed the federal
courts to foreign governments.

Now the doors of Florida's courthouses appear to be closing as well.

When asked if this ruling kills the entire line of legal attack by foreign
governments against tobacco companies, Richard A. Daynard, director of the
Tobacco Control Resource Center in Boston and a tobacco industry foe, said,
"I think it does."

Just three foreign government cases remain in two state courts -- Texas and
Louisiana, according to Kenneth Parsigian, a partner with Goodwin
Procter in
Boston who has led the tobacco defense in Florida.

The 3rd District Court of Appeal ruling centered on the legal doctrine of
remoteness. The doctrine says that a plaintiff cannot sue for harm inflicted
on a third party, but must establish direct damages.

"Simply, the government of Venezuela does not have a direct independent
cause of action against the tobacco companies to recover for smoking-related
medical expenses incurred by its citizens," the 3rd District Court of Appeal
held.

But Perwin insisted there is direct harm. "Venezuela was victimized by a
worldwide conspiracy by tobacco companies to suppress the truth about
nicotine," Perwin said. "Had Venezuela known the truth, it would have acted
to limit importation or taken steps to curb smoking."

Parsigian responded with the tobacco industry's classic defense. He said
that the foreign governments were not misled, because the U.S. Surgeon
General's report in 1964, which outlined the health dangers in smoking, was
widely published.

But what is perhaps most frustrating for Perwin and the foreign governments
is that their claims largely mirror those successfully brought by the
states. While some states, like Florida, enacted legislation to get around
the legal defense of remoteness, many other states did not. Nevertheless,
courts let the lawsuits go forward.

"Courts have had a hostility to these lawsuits," Daynard said.

Indeed, the 3rd District Court of Appeal signaled its distaste for the
lawsuits brought by foreign governments against the tobacco industry. It
wrote in an opinion that it "is inappropriate for Venezuela to attempt to
turn Miami-Dade County into the 'courthouse for the world.'"