The tobacco industry and the law – litigation and legal responsibility

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VicHealth Centre for Tobacco Control Carlton, Vic


Introduction

The harm caused by tobacco does not occur by chance. Right across the world, tobacco products are manufactured, promoted and sold by large, sophisticated multinational corporations. Like other corporations, tobacco companies seek to maximise their profits. Unlike other corporations however, they sell an addictive drug (nicotine) in a form (the cigarette) that kills half its long-term users when used exactly as intended, has no safe level of use and no identified therapeutic benefit.

Not to put too fine a point on it, tobacco companies kill a significant proportion of their customers. Doubtless, they do not aim to do this. Every smoker who dies prematurely represents a loss of custom and surely, this is to be regretted by tobacco company boards and senior management. But this is the undisputed effect of what tobacco companies do and the tobacco industry has known this since the early 1950s ie. for over 50 years.

So, what responsibility does the tobacco industry bear for the harm its products have caused and continue to cause? That question can be addressed on different levels.  One can speak of the industry’s moral or ethical responsibility, for example. We often hear tobacco companies described as among the most unethical of corporations. But one can also focus on something that is, in the end, more concrete and that can be enforced – legal responsibility. So, what legal responsibility does the tobacco industry bear for the harm its products have caused and continue to cause?

Tobacco Industry Legal Responsibility

Legal responsibility attaches to an individual or corporation’s conduct. When the law is working properly, individuals and corporations are held legally responsible for the things they do and the things they fail to do. In a courtroom, judges and juries see and hear the evidence and “find the facts”. They then apply the law to those facts and, if an individual or corporation’s conduct is found to fall short of their legal obligations, that individual or corporation is held responsible.

The consequences of being held legally responsible vary with the type of legal proceedings. In a civil claim for damages, the payment of compensation will be the primary consequence. In a criminal prosecution, the focus is on punishment, most commonly in the form of imprisonment or the imposition of a financial penalty (such as a fine or confiscation of the proceeds of crime). But in addition to these remedies of compensation and punishment, courts can grant injunctions, ordering a person or corporation to stop doing something (such as to stop making certain false or misleading representations to the public), or ordering that something be done (such as corrective advertising).

What we Know about Tobacco Industry Conduct

Litigation against the tobacco industry in the US over the last decade has exposed the history and nature of tobacco industry conduct for all the world to see. Millions of previously secret internal documents have been released. They tell an extraordinary and disturbing tale. The industry has known of the harmfulness of smoking since the early 1950s and of the addictiveness of nicotine since at least the early 1960s. Rather than coming clean and withdrawing their products from the market to try to put an end to the harm that had come to light, the industry decided to continue with business as usual. There was a conspiracy of denial of harms and addictiveness. Cigarettes were mass marketed aggressively as if they were beneficial, even healthy products. Imagery and associations far removed from the realities of harm and addictiveness were created. All efforts to regulate were fiercely resisted. When consumers began to be concerned by reports of harmfulness, the industry began to market “light” cigarettes. This suggested that these products were less harmful than “regular” cigarettes. Consumers who may otherwise have tried to quit were encouraged on to and reassured by these lighter products. At the same time the industry was designing “light” cigarettes in ways that allowed smokers to “compensate”, ie. to draw in harder to ensure that they could get the nicotine hit they were after. Machine-tested figures that allowed products to be called “light” and “low tar” did not accurately reflect actual delivery to smokers. Contrary to tobacco industry suggestions, “light” products did not turn out to deliver any health benefits.

In addition, the tobacco industry has learnt how to design and precisely engineer products in ways that make them more addictive and thus harder to quit. In an article published in the Journal of the American Medical Association (JAMA) in February 1997, David Kessler et al (of the US Food and Drug Administration) wrote of the “disclosure of thousands of pages of internal tobacco company documents revealing that the tobacco manufacturers know that nicotine causes significant pharmacological effects, including addiction, and design their products to provide pharmacologically active doses of nicotine”1.

Addiction, Causation and Legal Responsibility

This last category of conduct is particularly important. Tobacco industry defences to litigation and criticisms of tobacco litigation that are routinely aired in the media, generally argue that smoking is a behaviour of choice. No-one forces anyone to smoke. If a person chooses to smoke, they have no-one to blame but themselves. These are, however, superficial assertions that do not withstand the scrutiny of legal analysis. The typical tobacco industry consumer begins smoking in childhood. The typical smoker wants to give up, but continues to smoke primarily because of addiction to nicotine. The combination of starting in childhood and addiction give the lie to the glib assertion of “free choice”. In an internal document released through litigation in the US, Paul Knopick of the United States Tobacco Institute wrote in 1980: “Shook, Hardy and Bacon [lawyers for tobacco company Philip Morris, based in Kansas City, US] reminds us, I’m told, that the entire matter of addiction is the most potent weapon a prosecuting attorney can have in a lung cancer/cigarette case. We can’t defend continued smoking as ‘free choice’ if the person was ‘addicted’”2. And how much stronger are these arguments where the level of addictiveness is by design rather than chance?

In law, a person’s conduct does not have to be the “sole cause” of another’s harm for legal liability to attach. The law does not operate on an all-or-nothing basis. Full responsibility (ie. 100% responsibility) is not required for legal liability. It is enough if a person’s conduct “materially contributes to” another person suffering an injury.

The Promise of Litigation

Given the conduct of the tobacco industry, it is easy to understand why litigation against the tobacco industry should have been advocated and pursued. At one level, there are the justice arguments. Those who flagrantly disregard their legal obligations ought to be brought to account. The law falls into disrepute where it is ignored and no consequences are seen to follow. Why bother having laws if they need not be obeyed?

But litigation against the tobacco industry has much that is of practical, as well as symbolic value to offer. First, litigation has the potential to force people to change their behaviour. The payment of damages in civil proceedings is a cost to a defendant. Avoidance of future liability is a factor to be considered in decision-making. The more real the threat of litigation and the greater the liability if it materialises, the more heavily this factor weighs. Where proceedings are brought in the criminal context, the impact on behaviour is perhaps more immediate. Ordinarily, criminal conduct is not permitted to continue.

Second, where conduct has caused loss, civil responsibility can lead to the wrongdoer being forced to bear costs that others, including taxpayers, would otherwise have to bear, such as health care costs and social security payments. This is of particular significance in the tobacco context, given the scale of the harm caused by tobacco.

Third, litigation casts light on what has previously been kept in the dark. Litigation takes place in open court, individuals are cross-examined, documents (at least those that have not already been destroyed) must be disclosed. The process of uncovering the truth in open court and often under the glare of the media, plays an important role in influencing public perceptions about the issues at stake and therefore the context in which policy and regulatory debates are played out.

And fourth, through their injunctive powers, courts can order defendants to do some of the things that now need to be done to reduce the damage that they have caused. One High Court judge has described a mandatory injunction sought under the Trade Practices Act 1974 (Cth) as “apt to counterbalance the injury to the public interest” allegedly sustained by the relevant conduct3. And an enormous amount still needs to be done to even begin to counterbalance the harm done to the public interest by the tobacco industry.

Tobacco Litigation in Australia and the US

In the US, successful litigation has been brought both by individuals dying of smoking-related diseases, their surviving families and by state governments seeking the recovery of public medical expenditure. The US Federal Department of Justice is currently in the process of suing the tobacco industry to recover its “ill-gotten gains” under RICO (Racketeer Influenced and Corrupt Organisations) legislation, which is traditionally used against organised crime.

But what of litigation in Australia? Where the conduct of the tobacco industry and the resulting harm have been so alike, why not similar progress in Australia? The answer lies in the differences between the two legal systems and in the failure of governments and law enforcement agencies in Australia to do anything at all thus far to bring the tobacco industry to legal account.

While there have been attempts by private parties (as opposed to public bodies) to bring the tobacco industry to account in Australia, none has yet succeeded. This says nothing at all about the merits of litigation against the tobacco industry in Australia. In fact, no case has yet made it to trial on the merits in this country. Rather, it testifies to the enormous difficulties faced by individuals in Australia in fighting the tobacco industry in court. The tobacco industry is universally known to be the most aggressive of defendants. It fights litigation as hard as possible, knowing that it can outspend, overpower and usually outlive individual litigants. In Australia, unlike in the US, the general rule is that the losing party in litigation pays the other side’s costs. Plaintiffs and potential plaintiffs know that they risk losing everything if their case does not succeed and a case can fail for all sorts of reasons, often having nothing to do with how meritorious the claim itself was. The danger of facing an enormous costs order if litigation fails represents an enormous disincentive to bringing a case. Even if one wants to make a stand in one’s dying days and try to prevent others ending up in the same position in the future, why take the risk of leaving one’s family with bankrupting debts? In the US, the twin features of potentially massive punitive damages and contingency fees for lawyers can make it worthwhile for law firms to carry the financial burden of litigation. Not so in Australia, where both of these features are missing.

If litigation against the tobacco industry is to be successful in Australia, more likely than not it will need to be very substantially resourced and brought by a body that can be guaranteed to have the resources to see it through to the end. The obvious candidate in Australia is the Australian Competition and Consumer Commission (ACCC), which has responsibility for enforcing the Trade Practices Act 1974 (Cth). Among other things, the Act prohibits misleading or deceptive conduct in trade or commerce (section 52) and unconscionable conduct in consumer transactions (section 51AB). Unfortunately, the ACCC has so far shown no interest in bringing proceedings against the tobacco industry under the Act, though tobacco control advocates hope this will change in the future. Another possibility is prosecution by Directors of Public Prosecutions for breaches of the criminal law for offences such as manslaughter and reckless conduct endangering life 4.

International Recognition of the Importance of Tobacco Litigation

The World Health Organisation’s Framework Convention on Tobacco Control recognises the importance of litigation and its place in tobacco control strategies. Article 19 of the Convention provides: “For the purpose of tobacco control, the Parties shall consider taking legislative action or promoting their existing laws, where necessary, to deal with criminal and civil liability, including compensation where appropriate.” Litigation against the tobacco industry is likely to continue across the globe and to contribute much to the fight to reduce the death, disease and social costs caused by tobacco.

References

1. Kessler DA, Barnett PS, Witt A, Zeller MR, Mande JR, Schultz WB. The legal and scientific basis for FDA’s assertion of jurisdiction over cigarettes and smokeless tobacco. JAMA. 1997 Feb 5;277(5):405-9.

2. Knopick P. [Memorandum to W. Kloepfer]. 9 Sep 1980. Tobacco Institute. [document on the Internet]. Available from: http://legacy.library.ucsf.edu/tid/yol92f00.

3. Truth About Motorways Pty Limited v Macquarie Infrastructure Investment Management Limited [2000] HCA 11 (High Court of Australia, 9 March 2000), Gummow J at [80].

4. Liberman J, Clough J. Corporations that kill: the criminal liability of tobacco manufacturers. Crim Law J. 2002;26:225-7.

 

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