A federal judge yesterday dismissed a lawsuit brought by the government of Guatemala against the tobacco industry, saying officials could not show that the government suffered a "direct injury" from the actions of various cigarette makers.
The ruling, issued by U.S. District Judge Paul L. Friedman, could signal the fate of numerous other lawsuits filed by foreign governments against major tobacco companies. Friedman has been assigned to handle all tobacco litigation filed by foreign governments and now has jurisdiction over five other cases brought by the governments of Bolivia, Nicaragua, Ukraine and Venezuela, as well as the Brazilian state of Goias. Attorneys for the tobacco firms intend to attack those suits on similar legal grounds.
Guatemala had named 11 defendants, including Philip Morris Cos. and Brown & Williamson Tobacco Corp. The suit alleged that Guatemala has been forced to pay more than $300 million since 1973 to treat smoking-related illnesses and would have curtailed smoking in the country long ago if it had been aware of the dangers. The suit accused the tobacco companies of conspiring to conceal and misrepresent the health risks associated with their product.
From the start, attorneys for the tobacco firms accused the foreign governments of trying to cash in by joining a wave of litigation making its way through U.S. courts.
Steven B. Rissman, assistant general counsel for Philip Morris, said yesterday that Friedman's decision "should send a strong message to foreign governments looking to use the U.S. court system to generate cash windfalls for their government's treasuries."
"This opinion stands squarely for the proposition that these cases are based on a flawed legal theory and they have no place in our courts," Rissman said.
Nicholas Gilman, a Washington attorney representing Guatemala, said he and others are reviewing the decision and "the chances of an appeal are very good."
In his 19-page ruling, Friedman said the suit required the court to speculate about what actions the Guatemalan government would have taken to discourage smoking had it known the risks, to assess what impact those actions would have had, and to determine how much of the country's medical expenses were attributable to smoking. He said that this required too many "layers of conjecture" and that the law called for Guatemala to show it was directly harmed.
"Guatemala or its citizens may well have been victims of the tobacco industry, but Guatemala has alleged no injury resulting from defendants' alleged misconduct that is sufficiently direct to allow Guatemala to assert its claims," Friedman declared.
The judge said he was not ruling out other potential legal action. "Individual Guatemalan smokers are entirely capable of bringing their own lawsuits," Friedman wrote, adding that Guatemala then could attempt to seek reimbursement for medical costs. He said those claims more logically would be brought in Guatemala's courts.
The foreign cases were patterned on litigation filed by U.S. states that led the cigarette makers to agree to a $240 billion settlement last year. Lawyers for the tobacco companies insisted their pact with the states would have no effect on their dealings with foreign governments, saying they settled those suits for political reasons and without admitting wrongdoing. Besides the federal suits, two cases are pending in state courts: one by Panama, and one by the Brazilian state of Rio de Janeiro.
Friedman noted that his decision was at odds with an opinion rendered last week by U.S. District Judge Gladys Kessler. She ruled that numerous labor union health and welfare trust funds could pursue cases against the tobacco companies because the alleged conduct could have generated expenses that depleted the trusts' assets.
Richard Daynard, an anti-tobacco expert who leads the Tobacco Products Liability Project at Northeastern University in Boston, said he believes Friedman's decision will discourage other nations from filing similar claims anytime soon. He said an appeal "probably puts these cases in a state of suspended animation for the next year or two."
Daynard predicted that yesterday's decision will have little impact on a recent suit by the Justice Department that seeks billions of dollars on behalf of the United States from the major tobacco companies. That case is based on different laws, including the powerful federal civil racketeering statute and the Medical Care Recovery Act, he said.