The life and death of Nathan H. Horton, a Mississippi building contractor who smoked two packs of cigarettes a day and died of lung cancer in 1987, is once again the subject of a jury trial of potentially pivotal importance to the tobacco industry.

American Tobacco Co., manufacturer of the Pall Mall cigarettes Horton favored, is poised to argue that it is blameless in his death because he had freely made an informed choice to be a heavy smoker for more than 30 of the 50 years he lived. The company raised that defense in the first test of the Horton case, which ended with a hung jury and a mistrial in January 1988. It has been a compelling argument in other cigarette-defense litigation around the country.

But this time, pretrial court rulings have shifted the ground beneath the opposing sides.

Attorneys for Horton's widow and children will be permitted to argue that cigarettes are "unreasonably" dangerous -- more dangerous than ordinary consumers had reason to believe they were.

Under Mississippi law, if as few as nine of 12 jurors find a defendant manufacturer as little as 1 percent liable for an injury, they can award proportionate compensatory damages -- but unlimited punitive damages.

A dozen other states have similar fault laws, but Mississippi's has made it a crucial battleground between the tobacco industry and its courtroom opponents.

Litigation Litmus Test?

The case may determine whether smoker-death liability litigation against the tobacco companies will continue to recede or trigger a surge of new lawsuits. Currently, 55 suits are pending, compared with 167 in 1987.

Jury selection is scheduled to begin on Tuesday in Lafayette County Circuit Court in Oxford, Miss., where the case was moved from Holmes County, site of the 1988 trial.

Accusations of jury tampering interlaced with issues of race have marked the case.

Following the mistrial, plaintiff's lawyers accused American Tobacco of jury tampering; the company admitted its agents had talked to jurors but said the conversations were innocuous and "absolutely" not tampering. District Attorney Frank Carlton said that two jurors refused to discuss the matter with a state highway patrolman investigating possible criminal violations. The investigation found "improper conduct ... but no criminal intent to influence the jury," Carlton said. He declined to file charges, and the issue is now moot.

Early this year, while the re-trial was set for Holmes County, the Circuit Clerk's office in Lexington was broken into. The only thing disturbed was the locked jury box containing the names of potential jurors. No arrests have been made.

In a surprise action on the April morning when jury selection for the re-trial was to begin, Judge Eugene M. Bogen granted a defense motion for a delay and a change of venue. He said he did so because statements in a packet of materials given to the press and civic and political leaders by the Austin, Tex., law firm of plaintiff's lawyer Don. L. Davis, made a "blatant attempt to make an appeal on the basis of race to the persons in Holmes County and thus indirectly to the jury pool." Holmes County's population is about 70 percent black.

In one of the statements, Davis said: "This trial of a wrongful death suit brought by the widow and children of a black male ... comes at a time when the U.S. social climate is moving to stop the cigarette company's campaign of death."

American Tobacco became the judge's target in July, when Bogen denied its motion to call two local physicians as experts for the re-trial in Oxford. "The sole reason for their being called ... is to curry favor with the jury," the judge said. " ... Thinly disguised attempts to make political-type appeals to the citizens of Lafayette County will not be countenanced." Even before the Lexington trial began, Judge Gray Evans heard complaints that prospective jurors were being questioned by American Tobacco's paid agents and warned two of them to stop it. During the trial, he said he was told that jurors, or their families, friends or neighbors, were still being contacted, and he again warned defense counsel.

In declaring the mistrial in January 1988, Evans said he was doing so "very, very reluctantly for reasons which I do not feel would be advantageous for anybody to make known at this time." He added that he had never before had a jury that simply refused to deliberate. Plaintiff's lawyers later moved successfully to disqualify Evans.

A few weeks later, Horton's lawyer charged that at least one "paid agent" of American Tobacco Co. had "illegally and improperly contacted" some jurors and "at least attempted to improperly influence" them during the trial. They made the charge in court papers in an ultimately failed effort to obtain a court order to give them access to complete records of the contacts, to have American Tobacco and its co-defendant, New Deal Tobacco & Candy Co. of Greenwood, Miss., declared liable, and to have a trial solely on the issue of damages.

The lead local defense counsel, James E. Upshaw of Greenwood, who was retained by American Tobacco's New York law firm of Chadbourne & Parke, and Ed Blackmon Jr., also a local defense attorney, ridiculed the tampering charge. Upshaw denounced plaintiff's counsel for "a pathetic, pitiful ... absolutely incredible play." Blackmon said contacts were made on a day when the judge was ill, and that the intent was simply to let the jurors know the court would not be in session. But they admitted that Norman Clark Jr., a Lexington cotton farmer hired as a "jury consultant," had spoken with at least three jurors.

Clark's contacts were confirmed in affidavits by jurors Harvey S. Gamble and Luster D. Johnson. Three months later, in May, Clark admitted to a plaintiff's lawyer -- in a taped phone conversation in court records -- that "if I wanted to change a juror's mind and his philosophy, I don't talk to him, I can talk to his mother, his brother, his next-door neighbor, all these folks got influence on him." Clark also said the jurors' family members were "wined and dined" during the trial and that jurors' relatives were given "cash in their pockets."

The jury in Oxford, home of the University of Mississippi, will hear much more than a replay of the trial in Lexington, the rural seat of one of the nation's poorest counties. This is mostly because Judge Bogen has set aside two legal handicaps that Evans had placed on plaintiff's counsel in the first trial:

Ruling that American Tobacco can't be liable for selling "ordinary cigarettes," Evans did not allow Horton's lawyers to pursue the "strict liability" doctrine that cigarettes are unreasonably dangerous.

Denied that opportunity, plaintiff's attorneys tried to show that the tobacco Horton smoked had been contaminated by pesticides and that this was a factor in his illness.

Horton had smoked extra-length, nonfilter Pall Malls for at least a decade before the first government-mandated health warnings appeared on cigarette packages in January 1966.

In his opening statement in the 1988 trial, plaintiff's lawyer Don Barrett admitted to the jury, "right up front," that Horton had been partially responsible for his fatal lung cancer. It was unreasonable, he argued, for the American Brands division to be held wholly faultless.

But the outcome of 11 hours of consideration over two days was a hung jury. At one point, reportedly, eight jurors -- one shy of the required minimum -- agreed with Barrett and wanted to return a verdict for Horton's family. In the end, the split was 7-to-5 -- but with the majority now favoring American Tobacco. Even so, it was the first time the tobacco industry did not win a favorable verdict in a smoker-death case.

Bogen, however, has upheld the strict liability theory, meaning that the Oxford jury will be the first in the nation to make the call on whether a defendant's cigarettes were unreasonably dangerous.

Evans did not allow the plaintiff's lawyers to introduce evidence relating to American Tobacco's advertising and marketing strategies; Bogen is allowing it. In depositions before his death in January 1987, Horton expressed a liking for a Pall Mall ad saying, "Where particular people congregate." He also recalled his reaction to a television ad featuring a man who impressed him as being in robust health: If smoking wasn't hurting the man on television, why would it hurt him?

Horton had been a strapping building contractor -- 6 feet 1 inch tall, 185 pounds. A few days before he died in January 1987, when a reporter interviewed him, he weighed 137, was bent and gaunt, bedridden and dependent on blood transfusions and powerful painkillers. He said he'd been hooked on smoking: "The only way to stop is to catch it before it starts. ... I have nightmares about cigarettes."

In a videotaped deposition in 1986, plaintiff's lawyer Davis showed several Pall Mall ads to Paul K. Heimann, who was chairman and chief executive officer of American Brands and American Tobacco until his retirement in 1980. Heimann, who had begun to smoke at 14 -- and who also favored Pall Malls -- summed up the ads by saying they made smoking appear to be fun, pleasurable and "associated with happy occasions" and, "to a degree, with love and the outdoors."

Role of Public Relations

Bogen is considering a plaintiff's motion to introduce evidence intended to persuade the jury that public relations campaigns generated by the cigarette industry were designed to thwart government and other health warnings.

Experienced industry observers and legal experts had mixed reactions when asked which side may have the upper hand in Oxford. Salomon Brothers Inc. analyst Diana Temple said, "The industry's argument that most smokers knew the risk they are taking is more plausible than ever before." She said her "general observation" was that "because of the prevalence of warnings and prohibitions against smoking, juries are increasingly unsympathetic to persons who continue to smoke more than 20 years after the warning labels began to appear" in 1966.

Marc Z. Edell, an attorney who won a jury verdict in a wrongful death case in New Jersey against the Liggett Group, was upbeat about the Horton family's chances.

Citing the evidence of cancer-causing contaminants in tobacco, introduced in the Lexington trial, he asked, "How can {the jurors} find no fault whatsoever?"