Oregon High Court Rules State Cannot Release Interest in Tobacco Class Action Settlement

By December 21, 2011 Product Liability

As a Missouri injury attorney, I know states have been pursuing lawsuits with tobacco companies for many years, alleging the companies hurt people and drove up state costs by failing to disclose information on the risks of smoking. So I was interested to see a recent Oregon Supreme Court ruling saying that state could not legally release its claim to its share of a large tobacco settlement. Williams v. RJ Reynolds Tobacco Company was filed by Mayola Williams, the personal representative of deceased smoker Jesse Williams, and tied up in appeals in the 12 years since the original victory for Williams in 1999. Reynolds eventually paid the damages slated for the Williams estate, but refused to pay the 60 percent slated for the state of Oregon, saying the state released its claim to the damages in another settlement. In this case, the high court found that the state’s statutory right to the damages is not a “released claim” within the meaning of the settlement.
The estate of Jesse Williams sued after his death from lung cancer in 1997, alleging fraud and negligence by Reynolds. It won a total of $79.5 million in compensatory and punitive damages in 1999, and after lengthy appeals, the punitive damages award was upheld in 2009. The state of Oregon is entitled to 60 percent of the punitive damages under a state law funding crime victims’ services. Meanwhile, the state of Oregon itself had also sued tobacco companies, claiming millions in smoking-related losses for Medicaid and state employee health care expenses. That case was combined with other states’ cases and ended in a national settlement in which Oregon and other states released future claims relating to many aspects of tobacco products.
When the Williams case was originally decided, Reynolds told the state that the multistate settlement had relieved it of any duty to pay the 60 percent of the punitive damages in Williams. The state moved to enforce its damages in court, but this was stayed for years during appeals. When Williams was resolved, it recommenced trial and eventually found for Reynolds. Both Williams and the state appealed, and the Oregon Court of Appeals certified the case directly to the state Supreme Court.
Reynolds suffered a reverse of fortune on appeal, where the high court found no release of damages by the state of Oregon. In the multistate settlement agreement, Oregon released Reynolds from liability for “any and all civil claims… liabilities of any nature… whether legal, equitable or statutory.” The question is whether the state’s interest in the Williams settlement is covered by this release, the court noted. That interest was not created by direct participation in the case, it said, but by state statute. And that statute applies regardless of the nature or subject of the underlying claim, the court noted — which means the state’s interest does not truly arise from tobacco-related claims. The state is a judgment creditor, but does not have any special rights or obligations before judgment is entered. Thus, the state’s interest in these damages is not a “released claim” under the multistate settlement, even though that settlement defined “claim” quite broadly. The high court reversed the trial court and ordered an entry of judgment for the state.
As a St. Louis product liability lawyer, I applaud this decision. If Reynolds had succeeded on appeal, it would have been released from liability more than half of the money it was ordered to pay in the original case. And thanks to the decade of appeals in that case, the public can rest assured that those damages are legally valid. As it is, both the Williams estate and the state of Oregon have waited a decade or longer for the money they’re owed. This is possible for large companies like tobacco companies because they have the resources to keep legal issues alive, even when they look like losers, legally speaking. With so much money at stake, companies are often willing to spend a lot on lawyers to file “hail Marys,” because the legal fees are cheaper than paying what they owe. A large part of my work as a southern Illinois defective products attorney is helping injured people overcome the disadvantage their unequal resources gives them when they sue large companies.


If you believe you were hurt by a dangerous or defective product — from toys to appliances to food — you should call Carey, Danis & Lowe to discuss how we can help. For a free, confidential consultation, send us a message online or call toll-free at 1-877-678-3400.
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