Florida High Court Says Statute Of Repose Does Not Bar Engle Fraud Claims

TALLAHASSEE, Fla. — (Mealey’s) A plaintiff seeking to assert a fraudulent concealment claim in an Engle progeny suit is not required to prove reliance on statements made by the defendant tobacco company within the 12-year statute of repose period leading up to the May 5, 1994, filing of the original Engle complaint, the Florida Supreme Court ruled unanimously in two decisions issued April 2, resolving a conflict in the state appellate courts (Elaine Hess, et al. v. Philip Morris USA Inc., No. SC12-2153; Philip Morris USA Inc., et al. v. Tina Russo, et al., No. SC12-1401, Fla. Sup.). 

In two separate rulings, the state high court said that because the statute of repose for fraud is triggered by the last act or omission on the part of the defendant, it is not necessary for an Engle plaintiff to show detrimental reliance after May 5, 1982.  The Engle class action was decertified after trial and a $145 billion verdict in 2006 by the Florida Supreme Court (Engle v. Liggett Group Inc., 945 So. 2d 1246 [Fla. 2006] [enhanced opinion available to lexis.com subscribers]).  The court allowed approximately 700,000 class members to pursue individual claims using findings of fact from the original Engle trial.  

Hess

The first ruling came in a suit filed against Philip Morris USA Inc. by Elaine Hess on behalf of the estate of her husband, Stuart Hess, who died of lung cancer in 1997 after smoking two packs of cigarettes daily for 40 years.  A jury in the 17th Judicial Circuit Court for Broward County, Fla., returned a verdict of $3 million in compensatory damages and $5 million in punitive damages in February 2009.  The compensatory award was subsequently reduced to reflect the jury’s assessment of 58 percent responsibility to Stuart Hess.  The jury found that Hess had relied to his detriment on representations made by Philip Morris, but only before May 5, 1982.  Philip Morris’ motion for judgment as a matter of law on the fraudulent concealment claim was denied by the trial court.  

On appeal, the Fourth District Court of Appeal vacated the punitive damages award on May 2, 2012, ruling that the fraudulent concealment claim upon which it was based fell outside the 12-year statute of repose.  “Because reliance is an element of every fraud claim, and PM USA did not defraud Mr. Hess within the twelve-year period established by the statute of repose, we hold that the fraudulent concealment claim and the concealment-based punitive damages award are foreclosed by the statute of repose,” the panel said.   Hess successfully petitioned the Supreme Court for review. 

Vacating the Fourth District’s ruling, the Supreme Court said, “Engle-progeny plaintiffs must certainly prove detrimental reliance in order to prevail on their fraudulent concealment claims.  While we look to reliance in determining when an action accrued for application of the fraud statute of limitations, the accrual of an action has no bearing on the fraud statute of repose.  Because statutes of repose ‘run from the date of a discrete act on the part of the defendant,’ we hold that the defendant’s last act or omission triggers Florida’s statute of repose.  In other words, we find that ‘the date of the commission of the alleged fraud’ under [Florida Statutes] section 95.031(d), refers to the defendant’s wrongful conduct.  Thus, we conclude that for statute of repose purposes it is not necessary that the smoker relied during the twelve-year repose period.  Where there is evidence of the defendant’s wrongful conduct within the repose period, the statute of repose will not bar a plaintiff’s fraudulent concealment claims. [enhanced opinion]” 

Russo

In the second ruling, the high court cited its reasoning in the Hess case in finding that the Third District Court of Appeal properly upheld a trial judge’s rejection of a request by Philip Morris USA and R.J. Reynolds Tobacco Co. for an instruction limiting a jury’s consideration of smoker Phyllis Frazier’s reliance on statements made by the tobacco manufacturer to the time period after May 5, 1982.  

Frazier alleged that her chronic obstructive pulmonary disease (COPD) was caused by her more than 30 years of smoking.  The tobacco companies asked the judge to require the jury to determine if Frazier relied on statements made after May 5, 1982, 12 years before the filing of the original Engle complaint, in considering her claim of fraudulent concealment.  The judge denied the request.  The jury found that she was addicted to cigarettes and that her addiction was a legal cause of her COPD, but that she knew or should have known of her injury before May 5, 1990, and that, therefore, her claims were barred by the four-year statute of limitations.  The parties cross-appealed.  

The Third District Court of Appeal reversed and remanded for a new trial with instructions that the trial court enter a directed verdict for Frazier on the statute of limitations.  In addition, the appeals court rejected the tobacco companies’ contention that Frazier’s concealment claims were barred by the fraud statute of repose, holding that “the last act done in furtherance of the alleged conspiracy fixes the pertinent date for purposes of commencement of the statute of repose” and concluding that Frazier had introduced evidence of deceptive statements or omissions occurring after May 5, 1982.  The tobacco companies successfully petitioned the Supreme Court for review.  Because Frazier died during the pendency of the appeal, her daughter, Tina Russo, was substituted as plaintiff.  

Affirming, the Supreme Court said, “Consistent with our decision in Hess, we conclude that the district court below properly determined that the trial court did not err in denying PM USA and R.J. Reynolds’ requested jury instruction on the fraud statute of repose.  We emphasize that evidence of reliance need not be established within the fraud statute of repose period.  PM USA and R.J. Reynolds’ requested jury instruction would have precluded the jury from considering any evidence of reliance prior to the repose period. [enhanced opinion]” 

Justice Peggy A. Quince wrote both opinions.  Chief Justice Jorge Labarga and Justices Barbara J. Pariente, R. Fred Lewis, Charles T. Canady, Ricky Polston and James E.C. Perry concurred.  

Counsel

Hess is represented by John Stewart Mills and Courtney R. Brewer of The Mills Law Firm in Tallahassee; Gary Mark Paige and Adam Trop of Trop & Ameen in Fort Lauderdale, Fla.; Bruce S. Rogow and Tara A. Campion of the Law Firm of Bruce S. Rogow in Fort Lauderdale; Alex Avarez of The Alvarez Law Firm in Coral Gables, Fla.; and Marvin Weinstein of Grover & Weinstein in Miami Beach.  Philip Morris is represented by Joseph H. Lang Jr. of Carlton Fields Jorden Burt in Tampa, Fla.; Andrew S. Brenner, Patricia Melville and Luis Suarez of Boies, Schiller & Flexner in Miami; and Raoul G. Cantero III and John-Paul Rodriguez of White & Case in Miami. 

In Russo, Philip Morris is represented by William P. Geraghty, Frank Cruz-Alvarez and Alexandria Bach Lagos of Shook, Hardy & Bacon in Miami; Raoul G. Cantero III of White & Case in Miami; Gregory G. Katsas of Jones Day in Washington, D.C.; Benjamine Reid, Alina A. Rodriguez and Olga M. Vieira of Carlton Fields Jorden Burt in Miami; and Lauren R. Goldman and Scott A. Chesin of Mayer Brown in New York.  Russo is represented by Philip M. Gerson and Edward S. Schwartz of Gerson & Schwartz in Miami.

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