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May 22, 2001
Contact: Richard A. Daynard
WHAT HAPPENED IN THE ENGLE CASE ON MAY 7, 2001?
To avoid a court
challenge of the constitutionality of the special legislation enacted in 2000 by the
Florida Legislature that caps appeal bonds at $100 million per defendant, Philip Morris,
Liggett and Lorillard (the three participating defendants) entered into an
agreement with
plaintiffs' attorneys in the Engle case.
The
participating defendants agreed to increase the bond from approximately $203,000,000 to
$2,009,723,077.
Of the
$2,009,723,077 security, $709,723,077 plus interest and investment income will be
guaranteed to the Class, even in the unlikely event that the Class were to lose in the
appellate court. The Class will keep the
$709,723,077 plus interest, WIN. LOSE or DRAW.
The
participating defendant have agreed that they will neither remove this case to federal
court nor file a separate independent action in federal or any other court challenging the
November 3, 2000 judgment in the Engle case.
The
stipulation only relates to a stay during the appellate process in connection with the
review of the November 3, 2000 judgment.
R.J.
Reynolds and Brown & Williamson been given an opportunity to join the stipulation on
identical terms. The deadline for participation passed on May 21, 2001.
Engle Stipulation
Q&A
Q: Who gets
the $709.7 million if the tobacco industry wins their appeal?
A: Why the
class, of course.
Q: But if
the industry wins, there will be no class, i.e., it will have been decertified. So, again, who will actually get the money?
A: It gets
distributed by the Court according to the Florida Rules of Civil Procedure.
Q: But the
Florida Rules of Civil Procedure do not address a situation where a party just drops $710
million on the clerk’s desk, and says “distribute it”. If there’s no
case pending (or settled, or won by the plaintiffs), there are no rules.
A: Good
point! Indeed, it would seem that, for the court to distribute the money fairly, it would
need to use some procedure similar to what is used in class actions to decide who
qualifies as a class member, and how much each one is entitled to.
Q: So
doesn’t this partial settlement provide the plaintiffs' attorneys, the Rosenblatts,
with another argument for upholding the class certification, i.e. that the class action
mechanism is needed to distributed at least $710 million.
And, if you’re going to allow a class to proceed for that purpose, you might
as well just uphold the original class certification in Engle. A: Another good point! Q: What happened when the deadline passed for R.J. Reynolds and Brown and Williamson Corp. to sign the stipulation by the deadline on May 21, 2001? A: Neither company agreed to the stipulation agreement. The plaintiffs may challenge the suspect bond capping legislation and force RJ Reynolds to post a bond of about $40 billion and Brown and Williamson post a bond of about $20 billion in order to continue their appeals. These sums would likely be beyond even Reynolds' and Brown and Williamson's capacity to produce on short notice. Q: Will the plaintiffs be successful in a challenge to the bonding cap legislation?
A:
While we cannot be certain of the legal outcome to a lawsuit which has yet to be filed, we
do know that the legal braintrusts of Philip Morris, Lorillard, and Liggett are not
willing to risk their companies' futures on the outcome of such a legal challenge.
Apparently, Reynolds and Brown and Williamson are willing to take such a risk. A
court would not be likely to sympathize with the the position these company would find
themselves if they lose since they declined the opportunity to insure against such an
eventuality. |