Suits search for weak spots in tobacco firms' defenses

When Henry Horton's widow, Ella Mae, walked out of a courthouse in Lexington, Miss., she joined a long list of people who have fought the tobacco industry - and then run into a brick wall. A mistrial was declared Jan. 29, when jurors deadlocked seven to five over whether her husband's death was the responsibility of American Brands, whose cigarettes he smoked most of his life.

Cigarette manufacturers had won another round, even though it was the closest the industry has come to losing a case. While the case may be retried, the mistrial has helped harden the perception that cigarettemakers are virtually invulnerable to product-liability lawsuits.

``They haven't lost a suit in 30 years,'' says Jack Maxwell, a tobacco industry analyst with Wheat First Securities. ``I don't see why they should start now.''

But beneath the veneer of apparent invulnerability, there is another view.

``There is little question these suits are going to continue, and in coming months and years, there are going to be some very large judgments,'' says Edward Swartz, a product-liability lawyer. ``I would be very careful about advising clients that tobacco company liability is a dead horse.''

Thus, while many observers believe ``caveat smoker'' has become the essence of a new legal principle overhanging the nation's courts, there is a contrarian view that the battle will peak by the end of the decade.

If no liability suit has been won by then, ``there may not be any more of them,'' says Donald Garner, a product-liability expert at Southern Illinois University at Carbondale, Ill. That is because lawyers will not be interested in cases that cannot win. Do tobacco companies know this? ``Of course,'' he says.

Indeed, the body of popular opinion supporting the caveat-smoker theory hangs snugly on five jury verdicts and three recent federal appeals-court rulings in favor of tobacco companies. No cigarettemaker has ever had to pay a penny to anybody - except its own lawyers.

``These companies have covered all the potential bases on which people would sue them,'' says George Thompson, a tobacco analyst with Prudential-Bache Securities. ``I expect to see the number of lawsuits drop dramatically.'' The number has already fallen from 170 in early 1987 to about 120.

Legal victories, along with continued strong profits (despite fewer new smokers), have reinforced the belief that tobacco companies are financial, as well as legal, juggernauts. But even legal victories and cash reserves can be misleading indicators as to industry vulnerability, observers say.

One key reason the product-liability question still remains open is that there are several facets to the law, only one of which has been strongly addressed by the appeals-court rulings.

The courts have held that a smoker who continues smoking after the federal government required warning labels on cigarette packages in 1966 was responsible for his or her own actions in choosing to continue smoking.

``The mere fact we have three circuit courts that have validated the 1966 label as a warning doesn't rule out liability altogether,'' says Calvert Crary, a litigation analyst with Bear, Stearns & Co., a New York brokerage company. ``The tobacco companies have many duties other than merely providing an adequate warning.''

Capitalizing on these ``other duties,'' lawyers in Newark, N.J., are suing on behalf of Rose Cipollone, who began smoking at age 16 and smoked for 40 years before dying in 1984. To some experts the case is distinctly different.

Cipollone lawyers contend that internal corporate documents and the depositions of research officials of Philip Morris, Liggett & Myers, and Lorillard cigarette manufacturers show:

That Liggett & Myers conducted scientific studies in the early '50s which showed tars of cigarettes caused cancer in laboratory mice.

All three conspired, prior to 1966, to suppress negative research results, while company public relations and advertising told the public that smoking was safe.

Liggett discovered that it could make cigarettes that were less prone to causing cancer but chose not to manufacture them fearing liability suits for products already on the market.

In court last week, lawyers for the tobacco companies said the documents were taken out of context and that Mrs. Cipollone's continued smoking on her own.

Professor Garner says cases like Rose Cipollone's and others will ``help to define how these issues should be tried.''

Legal experts say the Cipollone case is different because it presents strong evidence about the companies' actions before warning labels were mandated.

``This is a new one,'' Garner says. ``Nobody knows how this suit will turn out.''