Corporate Responsibility: The Case of Big Tobacco
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Experts, RICO, Semantics

"Peer review" became a mantra for both sides as they extolled the expertise of their witnesses. Both sides seemed besotted with the achievements of their witnesses and the esteem they were held in by their colleagues. Everybody who testified for either side was an insider of some sort. There were no loners, no one working against the main currents of their professions. Outside of Hanson's "Behavioralism," no unpopular or minority opinions were going to be part of the case on either side.

Even Hanson had impeccable credentials within his primary field. He was criticized only because he stepped outside of it, crossing boundaries from Economics to Psychology. Even the plaintiff's legal team seemed unsure of what to do with Hanson's ideas. They let him run through them quickly, and did not provide the back-up that could have made his testimony stronger. Had they thought to pair him with a Psychologist/Statistician, for example, they could have strengthened his testimony. They never even allowed him to fully explain the tenets of his new "Behavioralist" school of thought, perhaps feeling it was, after all, too untested. The defense tried to make him look foolish, just another Don Quixote tilting at windmills. In general, they succeeded, even though they never really attacked the core of what he was saying.

The value that the lawyers placed on the actions and opinions of experts was most readily apparent in the direct and cross-examination of Jeffrey Harris, a physician and an MIT professor with a Ph. D. in Economics.

Harris wanted to show that the tobacco companies, by obscuring the scientific epidemiological evidence linking tobacco to disease, had directly affected the quit rates of smokers. To do this, he examined the quit rates of a group of insulators (who worked with asbestos) studied by Dr. Irving Selikoff of New York's Mount Sinai Hospital starting in 1962. It was Selikoff who, in 1967, first established the link in lung disease between asbestos and tobacco. According to Selikoff, an asbestos worker who smoked had a 90-times higher chance of getting lung cancer than did someone who neither smoked nor worked with asbestos. This rate, he showed, is much, much higher, too, than that for someone who only either smokes or works with asbestos solely.

Selikoff, as a result of his work with the insulators, campaigned for them to stop smoking. Harris felt that, if he could show that the insulators subsequently quit at a higher rate than other people did, he could also show how strongly the tobacco companies' promotional campaigns and denials of a material link between tobacco and disease had negatively affected people's desire to quit.

When he compared the quit rate of the insulators with that of various control groups (though there was not a really adequate control: Harris had to use a variety of means of establishing a control group, all open to question), Harris found that they, indeed, had a higher quit rate. Through various calculations, he was able to estimate to his own satisfaction how much more disease, and how many more claimants against the Trust, existed because the tobacco companies had subverted stop-smoking campaigns with their own counter-campaigns.

As this was the heart of the Trust's case, its basis for saying it had been damaged by the tobacco companies, the defense worked hard to demolish Harris's conclusions. Through a statistician, William Wecker, and economist James Heckman, they attacked Harris's model from all sides, most critically on the ways its base date was compiled. "Garbage in, garbage out," they claimed.

Harris had started his comparisons with 1962, the year Dr. Selikoff started working with the insulators. Right away, he saw a significant difference in quit rates, which he accounted to Selikoff's expert influence. Wecker took the same data back further, to the early fifties. What did he find? The insulators already had a significantly higher quit rate than any of the other groups used as a control.

But Harris was so linked to the influence of Selikoff that he could not see that the insulators, if left to their own devices, might still have had a higher quit rate. It makes sense: The insulators had been working with asbestos for years, and a huge percentage of them smoked. They would know that they were coming down with lung disease at a high rate. It is only natural that many of them would have wanted to put down a habit that they could see affected their lungs.

The tobacco companies could have argued that, once they saw what cigarettes could do, some people were going to quit, no matter what anyone said, especially tobacco companies. This argument would have special weight given the historical situation. Cigarette smoking skyrocketed in World War I, continued to grow more slowly, then skyrocketed again during World War II. As lung disease takes decades, to appear, it would only have been in the early 1950s that the dangers of cigarettes would have become graphically apparent to most Americans. The decline in smoking since, though hastened by various scientific discoveries and summaries such as the 1964 Surgeon General's Report, might have taken place even without them. People are not stupid; they saw the connection between smoking and disease before being told of it.

So invested were they in the roles and impacts of experts that individual volition was not considered by either side. The closest anyone came to this was another Harvard Law professor, W. Kip Viscusi, who argued that, morally speaking, it was fine for people to smoke, as long as they had all the information about smoking before them. He based his argument on a "rational consumer" ideal. The problem with his rather naïve assertion is that decisions to smoke are not rational, but emotional. No simple balancing of pros and cons has ever led anyone to take up cigarettes.

Through the weeks, Westbrook painstakingly presented his case — and Bernick tried to destroy it. We jurors thought of them as well matched: Even their summations proved equally powerful. Neither was more convincing than the other, which is to say that each was extremely convincing. It was only as the judge read us the charge, therefore, that most of us were finally able to start dispassionately considering the case on its merits, to start making up our own minds.

The charge, given by the judge to the jury once testimony was over, tried to encapsulate all we had heard within the context of the specific applicable laws. In it, Judge Weinstein outlined the case for us:

The Trust contends that Defendants have injured it through an agreement to distort the body of public knowledge. It claims that the tobacco industry created doubt about the dangers of smoking in general and the combined effects of tobacco and asbestos in particular, and falsely promised to research and tell the truth about all phases of tobacco use and health without any intention of doing so. The Trust claims that beginning in the mid-1950s, the tobacco companies agreed to a scheme in which they would collectively attempt to reassure the public that it was safe, and acceptable to smoke and that the hazards of smoking had not been proven despite their knowledge that smoking was both dangerous and addictive. It contends that steps in this scheme were the publication of the "Frank Statement" nationwide in 1954 and the creation of the CTR (then called the Tobacco Industry Research Committee). The Trust contends that aspects of this agreement continue through today.

The Trust also claims that by the mid-1960s the tobacco companies knew, or should have known, that the combination of tobacco and asbestos is extraordinarily dangerous; the tobacco industry targeted its marketing directly at blue collar workers, including asbestos-exposed smokers, and opposed attempts to reduce smoking among those workers.

The Trust contends that as a result of this tobacco industry misconduct, fewer of its claimants quit smoking than would have been the case had they appreciated the true risks that they faced by smoking, and, in some cases, more of them began smoking. The Trust claims that many of the claimants who were deceived by the tobacco industry into continuing (or starting) to smoke developed injuries, or more severe injuries, payable by the Trust, and that the Trust properly paid those claims.

According to the charge, the tobacco companies could be found guilty in this lawsuit under any or all of three elements: First was the RICO Act, specifically United States Code Title 18, Section 1962(c), reading:

It shall be unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of an enterprise's affairs through a pattern of racketeering activity.

Secondly, Section 349 of New York's General Business Law, the New York Consumer Protection Act:

Deceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in this state are hereby declared unlawful.

The third was Common Law Fraud, whereby a plaintiff can sue to recover damages resulting from alleged fraud and deceit on the part of the defendant.

Judge Weinstein broke each element down further into items that all had to be proven, by a preponderance of the evidence (as demanded by law for the first element) or by clear and convincing evidence (for the second and third elements), for the defendants to be found guilty.

Under the RICO statute, the judge wrote, we would have to prove all of the following:

1. That an enterprise existed;
2. That an enterprise affected interstate commerce;
3. That the defendant (which may be a corporation) was associated with or employed by the enterprise;
4. That the defendant engaged in a pattern of racketeering activity by committing the requisite related and continuous acts of mail fraud or wire fraud;
5. That the defendant conducted or participated in the conduct of the enterprise through that pattern of racketeering activity; and
6. That the predicate acts caused injury to the Trust's business or property.

Furthermore, #4 above would not be proven unless all of the following elements of it were proved:

1. There was a scheme or artifice to defraud or to obtain money or property by materially false and fraudulent pretenses, representations, or promises;
2. The defendant knowingly and willfully participated in the scheme or artifice to defraud by materially false and fraudulent representations or promises, with knowledge of its fraudulent nature and with specific intent to defraud those who ultimately did become claimants of the Trust knowing they would be likely to be compensated for their disease;
3. In execution of that scheme to defraud by false and fraudulent pretenses, representations or promises, the defendant used or caused the use of the mails or wires;
4. The Trust justifiably relied in that it was misled into paying the portion of those claims caused by the alleged fraudulent conduct of the defendants;
5. Trust claimants justifiably relied upon the alleged false and fraudulent representations or promises; and
6. The Trust’s injuries resulted from its justifiable reliance.

Under the Consumer Protection Act, it would have to be shown that:

1. The challenged act or practice was consumer-oriented and that claimants to the Trust were consumers of products (here cigarettes) sold by the defendant;
2. The challenged act or practice occurred after June 19, 1980 in the State of New York;
3.  The challenged misrepresentation through act or practice was misleading in a material way; and
4. The Trust suffered actual injury as a result of the challenged acts or practices.

For Common Law Fraud:

1. The particular defendant made a representation of material fact to claimants of the Trust;
2. The representation was untrue;
3. The particular defendant intended to deceive claimants to the Trust knowing they would be likely to be compensated for their diseases, and those who would be likely to compensate claimants;
4. Claimants to the Trust believed and justifiably relied upon that particular defendants’ statements, and the Trust relied in that it was misled into paying the claimant for illnesses caused in whole or in part by that particular defendant, and that such reliance by the claimant and by the Trust was reasonable; and
5. As a result, the Trust sustained pecuniary loss.

The judge went on in the charge to detail the defense:

Defendants contend that from the moment it opened its doors in 1988, the Trust has been fully aware of synergy between tobacco and asbestos and the relative contribution of each to the diseases for which the Trust pays compensation.

Each defendant denies that it engaged in a scheme to distort public knowledge concerning tobacco and asbestos; denies that the Trust or the Trust’s claimants relied on misrepresentations concerning tobacco and asbestos; and denies that the Trust was injured by anything the defendants did.

The tobacco companies responded to the charge against them by saying that, among other things, when “the Manville Trust opened, Manville Trust started to pay their share.   Not everybody else’s share.   Not tobacco’s. ”  Therefore, in the view of the defense, the tobacco companies owed the Trust nothing.

Now, as the judge was concluding, I was being forced to face what had been becoming increasingly apparent: the Trust did not have a case.  

One of the last things that the judge told us was that the ‘fair share’ the Trust wanted the tobacco companies to pay was 145 million dollars — or thereabouts.   Later, once the trial had ended, defense lawyers would tell us that the Trust would have asked for additional billions in damages, had we found for it.

Once the judge had finally finished reading the fifty-page charge to us, we were led back to the jury room to begin our deliberations.   As a former teacher, my fellow jurors thought that I might be a good choice for foreperson, and I was so elected.  

As I looked at my fellow jurors, I realized that I had indeed changed my mind about the case.   It seemed clear: On no basis could I agree to convict the tobacco companies.   The case against them, in all its aspects, was just too weak.   Had there been fraud?  Perhaps there had been attempts at deception, but I could not see how they amounted to fraud, especially as the deceptions would have had to hurt someone directly for them to amount to fraud.   Sure, millions of people have been harmed — have been killed — by tobacco, but did that take place because of deceit by the tobacco companies?  I could not think so.   I, for one, had started smoking fully aware of the dangers of tobacco.   I couldn’t blame the tobacco companies for my own stupid decision.   When I had quit for the final time twenty years later, I had no more information about tobacco than when I had started.

However, I was aware of fraud beyond the purview of our instructions from the judge: We weren’t considering whether or not the tobacco companies had fraudulently promoted “light” and “low-tar” cigarettes as a healthier alternative to their regular products.   It was the role of the tobacco companies regarding smoking as a whole that we had been asked to consider.   Too bad, I thought to myself.

Still, I had to ask myself, who in their right mind would look to the tobacco companies for information about tobacco?  Of course the companies would defend smoking — and would offer products designed to keep smokers smoking.   One of the things the judge had said was that the “claimants must exercise ordinary intelligence in relying.   The Trust must exercise intelligence to be expected of an organization in its position in relying. ”  Only someone lacking common sense — lacking ordinary intelligence — would rely on tobacco companies for information about tobacco.   And the Trust?  With all its access to doctors and lawyers?  No organization like that could ever be expected to honestly rely on an industry like tobacco for information about its products.

Still, making it seem like we were doing something for our own health by smoking “light” and “low-tar” cigarettes had been effective.   I knew so from my own struggles before I had finally stopped smoking.   Often, I had rationalized that what I was doing when I smoked my “light” cigarettes wasn’t quite so unhealthy — even though I knew that I smoked more of them and pulled harder on them.

To find for the plaintiff, it would have to be shown that the Trust had been materially damaged — that it had spent extra money — because of fraud perpetrated by the tobacco companies.   As the Trust couldn’t even make a convincing case that it had paid tobacco’s share of the disease it was paying claimants for, it surely couldn’t be argued that it had been harmed by big tobacco’s deceit.

I wasn’t yet emotionally comfortable with my decision, but I had told the judge I would be fair and impartial.   Now, my task as foreperson would be to try to get others to be so, too.   If they could actually be fair and impartial, I felt they would come to believe as I did.   No matter how reluctant they might be, they would be forced to accept, as I had, that the Trust, in fact, did not have a case.

One of the mistakes that I made, perhaps my biggest, was in assuming too much acuity on the part of my fellows.   Most of us had paid attention to the judge as he read his charge, and had understood the gist of what was expected from us.   One, however, as I started going over the charge for us again as a group, said we weren’t supposed to be doing it that way.   We should each be reading the charge alone, she said, coming to our own conclusions, then voting.

I had no idea why she said this.   She shook her head, and said that she, anyway, was going to read it on her own.   The rest of us could do as we liked.   Stumped, I looked at the others.

“Should we go on, or wait for her to read?” I asked.   We went on, and she read on her own.

Only days of frustrating deliberation later did I realize what had happened, that she has interpreted “unanimity” (in complete accord) in the charge as “anonymity”  (unknown).  Had I recognized this earlier, I would have taken the time to explain the difference to her.   I would have taken us through the judge’s instructions at the beginning of the charge, something I did not then do, for we had just heard them and they had seemed quite clear and not open to dispute.

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