Product Liability -- 2005



Simon II Litigation v. Philip Morris USA Inc.   (2nd Circuit)

Limited fund punitive damages class action recertification

The U.S. Court of Appeals for the Second Circuit ruled 5/6/05 that Judge Jack Weinstein improperly certified a class of plaintiffs for purposes of awarding punitive damages, without any finding of actual liability. The NAM joined with the Washington Legal Foundation 6/4/03 urging an appeals court to overturn the certification of this class action by smokers against cigarette manufacturers. The judge had found that because there is a constitutional limit on the amount of punitive damages that can ultimately be awarded, the case could be certified under the rule governing "limited fund" cases. We argued that this class should not be certified under that rationale since the court did not quantify the amount in the limited fund. Second, the court's nebulous standard would allow virtually any mass tort case to be certified as a class action. Third, the manufacturers' due process rights were violated by an order (1) that prohibits certain plaintiffs from withdrawing from the litigation and (2) that applies New York law to the claims of all class members.

The appeals court unanimously overturned the class certification because it didn't fit into the limited fund category. Said the court, "[T]here is no evidence by which the district court could ascertain the limits of either the fund or the aggregate value of punitive claims against it, such that the postulated fund could be deemed inadequate to pay all legitimate claims."