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Dewey v. R.J. Reynolds Tobacco Co.

Decided: July 26, 1990.

CLAIRE E. DEWEY, INDIVIDUALLY AND AS EXECUTRIX OF THE ESTATE OF WILFRED E. DEWEY, DECEASED, PLAINTIFF-RESPONDENT AND CROSS-APPELLANT,
v.
R.J. REYNOLDS TOBACCO CO., DEFENDANT-INTERVENOR, AND R.J. REYNOLDS INDUSTRIES, INC., AMERICAN BRANDS, INC., (FORMERLY THE AMERICAN TOBACCO COMPANY, INC.), DEFENDANTS, AND BROWN & WILLIAMSON TOBACCO CORPORATION, DEFENDANT-APPELLANT AND CROSS-RESPONDENT



On appeal from the Superior Court, Appellate Division, whose opinion is reported at 225 N.J. Super. 375 (1988).

For affirmance in part; for reversal in part; for remandment -- Justices Clifford, Handler, O'Hern and Stein, and Judges King and Coleman. Concurring in part; dissenting in part -- Judge Antell. The opinion of the Court was delivered by Clifford, J. Antell, P.J.A.D. (temporarily assigned), concurring in part, dissenting in part.

Clifford

[121 NJ Page 72] This products-liability case poses two troubling questions: (1) whether the Federal Cigarette Labeling and Advertising Act, 15 U.S.C. §§ 1331-41 (1982 & Supp. III 1985) (hereinafter Cigarette Act), preempts plaintiff's claims, and (2) whether the recently-enacted New Jersey Products Liability Law, N.J.S.A. 2A:58C-1 to -7 (hereinafter Products Liability Law) is applicable retroactively and renders a surviving claim invalid as a matter of law. The Law Division entered an order of partial summary judgment in favor of defendant Brown & Williamson Tobacco Co. Dewey v. R.J. Reynolds Tobacco Co., 216 N.J. Super. 347, 358, 523 A.2d 712 (1986). On the parties' interlocutory appeal and cross-appeal the Appellate Division affirmed. Dewey v. Brown & Williamson Tobacco Co., 225 N.J. Super. 375, 542 A.2d 919 (1988). We granted both plaintiff's and Brown & Williamson's motions for leave to appeal, 113 N.J. 379, 550 A.2d

481 (1988). We now answer the two questions posed above in the negative.

I

In 1982 plaintiff, Claire Dewey, individually and as executrix of her husband's estate, sued R.J. Reynolds Tobacco Co., R.J. Reynolds Industries, Inc., American Brands, Inc., and Brown & Williamson Tobacco Co. Plaintiff's complaint alleged that her husband had developed lung cancer from smoking defendants' cigarettes from 1942 until eight months before his death in 1980. Count one asserted general theories of design defect, including a claim of inadequate warning, and count two alleged theories of fraud and misrepresentation in advertising. Counts three and four were derivative.

During discovery, plaintiff disclosed that her husband had not smoked defendant Brown & Williamson's cigarettes ("Viceroy") until 1977, thirty-five years after he had started to smoke and eleven years after Congress had enacted the Cigarette Act, which requires that each package of cigarettes carry a warning of the alleged health hazards of smoking. See 15 U.S.C. § 1333. Brown & Williamson then moved for summary judgment on two grounds: (1) that the Cigarette Act preempted all of plaintiff's claims, and, alternatively, (2) that the complaint was deficient as a matter of New Jersey substantive law because comment i of Section 402A of the Restatement of Torts (Second) (hereinafter Restatement) bars the imposition of strict liability for a product "whose danger is contemplated by the ordinary consumer who purchases it, with the ordinary knowledge common to the community as to its characteristics * * *."

The trial court dismissed so much of the first count of plaintiff's complaint as alleged liability for failure to warn, and the entire second count, which alleged fraud and misrepresentation in advertising, on the ground that the Cigarette Act preempts all those claims. 216 N.J. Super. at 355, 523 A.2d 712. That result was compelled, according to the court, by the Third

Circuit's interlocutory decision in Cipollone v. Liggett Group, 789 F.2d 181 (1986), cert. denied, 479 U.S. 1043, 107 S. Ct. 907, 93 L. Ed. 2d 857 (1987), which held that the federal Cigarette Act impliedly preempted state-law damage actions that challenge "either the adequacy of the warning on cigarette packages or the propriety of a party's actions with respect to the advertising and promotion of cigarettes." 789 F.2d at 187 (footnote omitted). The Third Circuit reaffirmed its preemption decision in post-trial proceedings in Cipollone v. Liggett Group, 893 F.2d 541, 581-82 (1990), with Chief Judge Gibbons concurring "only because this panel is bound" by what he perceived as the court's previous "erroneous opinion." Id. at 583.

The trial court in this case, however, did not dismiss plaintiff's design-defect claim on preemption grounds. The court believed that " Cipollone made clear that the regulatory scheme of the [Cigarette] Act and the federal interest involved was not so pervasive as to preclude all tort remedies which a plaintiff in smoking and health-related litigation may have under state law." 216 N.J. Super. at 356, 523 A.2d 712. Plaintiff could pursue a design-defect claim by showing, under the "risk-utility" test for determining design defect, that the risks posed by cigarettes outweighed their utility. She did not have to prove the existence of an alternative, safer design. Ibid. The court made no mention of the impact of comment i of Restatement Section 402A on the claim that survived preemption.

The Appellate Division affirmed substantially for the reasons expressed by the trial court, subject to "such modifications as intervening law makes necessary," 225 N.J. Super. at 377, 542 A.2d 919. Specifically, the Appellate Division modified the trial court's decision regarding the design-defect claim by stating that the principles of comment i of the Restatement Section 402A were applicable to the case pursuant to N.J.S.A. 2A:58C-3a(2), the "defenses" section of the Products Liability Law. Id. at 385, 542 A.2d 919. Thus, the court had "no quarrel with defendant's proposition that plaintiff may not recover if a factfinder concludes that the death of her decedent was caused

in large measure from exposure to the danger inherent in all cigarettes, a danger acknowledged to be within his contemplation as an ordinary consumer." Id. at 386, 542 A.2d 919. However, that proposition did not compel a legal conclusion that there was no material issue of fact regarding defendant's ability "'to minimize the unavoidable [ i.e. inherent] dangers attendant to cigarette smoking.'" Ibid. (quoting 216 N.J. Super. at 358, 523 A.2d 712). Plaintiff was therefore entitled to present to a factfinder evidence regarding alternative design or, as the Appellate Division described it, evidence "concerning defendant's cigarettes as defendant designed them and decedent smoked them." Ibid. The Appellate Division then summarized its holding by stating that although "the jury should not be asked to compare the risks and utility inherent in cigarette smoking nor to make findings of fact concerning whether decedent was adequately warned of those risks, plaintiff should be permitted to go forward with her cause of action." Id. at 388, 542 A.2d 919.

In addition to granting plaintiff and Brown & Williamson leave to appeal, we allowed defendant R.J. Reynolds Tobacco Company to file a brief and appear as intervenor.

II

Integral to our analysis is a preliminary determination of whether plaintiff's complaint states a claim for design defect. Although our Rules of Court require that "all pleadings must be construed liberally in the interest of justice, R. 4:5-7, a party's pleadings must nonetheless fairly apprise an adverse party of the claims and issues to be raised at trial." Miltz v. Borroughs-Shelving, 203 N.J. Super. 451, 458, 497 A.2d 516 (App.Div.1985); see also Hewitt v. Hollohan, 56 N.J. Super. 372, 377, 153 A.2d 371 (App.Div.1959) ("a vague complaint, full of generalities, frequently indicates that the pleader has not thought through his cause of action, and does not yet know precisely upon what theory he will present his case"). In Miltz,

for example, the allegation in a complaint that the plaintiff's injuries were proximately caused by the defendant's "failure to install stairs properly," 203 N.J. Super. at 458, 497 A.2d 516, was insufficient notice of a negligent-inspection theory of the case. In this case defendants similarly assert that they were not aware of plaintiff's claim for design defect until the summary-judgment motion because plaintiff's second amended complaint omitted the term "design defect."

Although the first count of the second amended complaint does not contain the words "design defect," the complaint does allege that defendants' tobacco products "were not reasonably fit, safe and suitable for human use at the time the products were placed in the stream of commerce" -- the talismanic language of a strict-liability claim. See Suter v. San Angelo Foundry & Mach. Co., 81 N.J. 150, 176, 406 A.2d 140 (1979). Immediately following the foregoing language, the complaint asserts that "Defendants further failed to warn the general public and/or Plaintiff's decedent of deleterious, toxic and hazardous nature of their products for numerous years," and that "[t]he unfitness, unsuitableness and unsafeness of the Defendants' products, along with the failure of the Defendants to warn and/or convey an adequate warning caused the Plaintiff's decedent to suffer serious, severe, disabling and permanent injuries and death * * *." (Emphasis added.) The quoted language suggests that plaintiff's complaint alleged two distinct categories of defects: one involving the unsuitability of the product for consumption, the other focusing on the warning label. Contrary to Brown & Williamson's claim, it was therefore apparent on the face of the complaint that plaintiff was asserting more than an inadequate-warning claim. Although more by way of facts regarding the design defect would have been enlightening, see Rule 4:5-2, we agree with the Appellate Division's finding that "[t]o the extent that plaintiff's complaint was deficient, the judge properly looked to the entire record, giving plaintiff every favorable inference," 225 N.J. Super. at 382 n. 5, 542 A.2d 919, and that the trial court had correctly

concluded that the complaint was sufficient to support a claim of design defect.

-A-

We turn to the issue of whether the federal Cigarette Act preempts any of plaintiff's common-law tort claims. Defendants contend that although the Appellate Division correctly affirmed the trial court's dismissal of plaintiff's inadequate-warning and fraudulent-advertising claims on preemption grounds, the court should also have held that the Cigarette Act preempts plaintiff's alternative design-defect claim. Plaintiff counters that dismissal, on the basis of preemption, of any of the theories alleged in her complaint would represent a misapplication of United States Supreme Court precedent.

Pursuant to the Supremacy Clause of the United States Constitution, article VI, clause 2, Congress may preempt state common law as well as state statutory law through federal legislation. Chicago N.W. Transp. Co. v. Kalo Brick & Tile Co., 450 U.S. 311, 325-26, 101 S. Ct. 1124, 1134, 67 L. Ed. 2d 258, 270 (1981). The essential question for any preemption analysis is "whether Congress intended that the federal regulation supersede state law." Louisiana Pub. Serv. Comm'n v. Federal Communications Comm'n, 476 U.S. 355, 369, 106 S. Ct. 1890, 1899, 90 L. Ed. 2d 369, 382 (1986). That inquiry is simple enough when Congress has expressly defined the extent to which the statute preempts state law. See, e.g., Schneidewind v. ANR Pipeline Co., 485 U.S. 293, 299, 108 S. Ct. 1145, 1150, 99 L. Ed. 2d 316, 325 (1988). Preemption may nevertheless arise "by implication" when, for instance, "the scheme of federal regulation is so pervasive as to make reasonable the inference that Congress left no room for the State to supplement it," Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230, 67 S. Ct. 1146, 1152, 91 L. Ed. 1447, 1459 (1947), or when the "object sought to

be obtained by federal law and the character of the obligations imposed by it may reveal the same purpose." Ibid.; see Exxon Corp. v. Hunt, 97 N.J. 526, 532-33, 481 A.2d 271 (1984). And even in the absence of express language or implied congressional intent to occupy the field, state law may be preempted "to the extent that it actually conflicts with federal law." Brown v. Hotel Employees Int'l Union, 468 U.S. 491, 510, 104 S. Ct. 3179, 3185, 82 L. Ed. 2d 373, 383 (1984). Examples of "actual conflict" include instances in which compliance with both state and federal regulations is physically impossible, Florida Lime & Avocado Growers v. Paul, 373 U.S. 132, 142-43, 83 S. Ct. 1210, 1217, 10 L. Ed. 2d 248, 256-57 (1963), or in which state law "stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress." Hines v. Davidowitz, 312 U.S. 52, 67, 61 S. Ct. 399, 404, 85 L. Ed. 581, 587 (1941).

Obviously, then, preemption often hinges "on * * * question[s] of statutory construction and interpretation." Palmer v. Liggett Group, 825 F.2d 620, 623 (1st Cir.1987); L. Tribe, American Constitutional Law at 479-97 (2nd ed.1988) (discussing preemptive effect of federal legislation on state action). That simple point poses a unique issue in this case, because New Jersey precedent appears to hold that state courts are bound by the federal courts' interpretations of federal statutes, Southern Pac. Co. v. Wheaton Brass Works, 5 N.J. 594, 598, 76 A.2d 890 (1950), cert. denied, 341 U.S. 904, 71 S. Ct. 614, 95 L. Ed. 1343 (1951), and because the Third Circuit has already determined that the Cigarette Act preempts failure-to-warn claims as well as claims challenging the content of cigarette advertising. Cipollone v. Liggett Group, supra, 789 F.2d at 187. Defendants contend that our task is merely to adopt the Third Circuit's reasoning in Cipollone, as did the trial court in this case. See 216 N.J. Super. at 355, 523 A.2d 712. That contention requires us to examine the logic underlying adherence to federal law on the meaning and effect of a federal statute.

In Wheaton Brass Works, supra, 5 N.J. 594, 76 A.2d 890, this Court resolved a dispute over freight charges under the Interstate Commerce Act. Although stating generally, and perhaps imprecisely, that the case required "consideration of the applicable provisions of the Interstate Commerce Act as construed by the federal courts whose decisions on federal problems are controlling," id. at 598, 76 A.2d 890, the Court was clearly referring to the binding nature of the United States Supreme Court cases and not of lower-federal-court cases. See West Jersey & Seashore R.R. v. Lake & Risely Co., 105 N.J.L. 314, 316, 145 A. 336 (Sup.Ct.1929); Note, "Authority in State Courts of Lower Federal Court Decisions on National Law," 48 Colum.L.Rev. 943, 944-45 n. 15 (1948). Not since Wheaton Brass has this Court ever suggested that lower-federal-court decisions on the interpretation of federal statutes are binding as a matter of law. But see Urban League v. Mayor of Carteret, 170 N.J. Super. 461, 469, 406 A.2d 1322 (App.Div.1979) (federal-court decisions on the interpretation of federal statutes are binding precedent), rev'd on other grounds sub nom. Southern Burlington County N.A.A.C.P. v. Mount Laurel, 92 N.J. 158, 456 A.2d 390 (1983). Indeed, in State v. Coleman, 46 N.J. 16, 214 A.2d 393 (1965), in which this Court declined to follow the Third Circuit's federal-constitutional analysis in United States ex. rel. Russo v. New Jersey, 351 F.2d 429 (1965), we stated generally that

when adjudicating federal questions, the state courts form an integral part of the national structure and that:

In that capacity they occupy exactly the same position as the lower federal courts, which are coordinate, and not superior to them. There is no appeal from the state to the lower federal courts. Instead both are subject to the reviewing power of the Supreme Court, which furnishes the unifying principle. Decisions of a lower federal court are no more binding on a state court than they are on a federal court not beneath it in the judicial hierarchy. [ Id. at 37, 214 A.2d 393 (quoting Note, supra, 48 Colum.L.Rev. at 946-47).]

Neither Coleman nor the article quoted in Coleman distinguished between the binding effect of decisions involving constitutional interpretation and those involving statutory interpretation.

See, e.g., Dewey v. Brown & Williamson Tobacco, supra, 225 N.J. Super. at 378 n. 2, 542 A.2d 919. Consequently, we reject any such distinction, and clarify that in neither situation are the decisions of the lower federal courts "binding" per se.

Instead, the operative principle that informs the discussion is the principle of "judicial comity." Stated simply, lower-federal-court decisions in this area should be accorded due respect, particularly where they are in agreement. See, e.g., State v. Norflett, 67 N.J. 268, 286, 337 A.2d 609 (1975). By helping to ensure uniformity, judicial comity discourages forum shopping. Hence, starting with a brief review of the Cigarette Act, we undertake an independent analysis of the federal scheme.

-B-

Perhaps the most significant event that precipitated the Cigarette Act was the 1964 Surgeon General's Advisory Committee Report, which authoritatively concluded that "[c]igarette smoking is a health hazard of sufficient importance in the United States to warrant appropriate remedial action." H.R.Rep. No. 449, 89th Cong., 1st Sess. 1, reprinted in 1965 "U.S.Code Cong. & Admin. News" 2350, 2351. Specifically, the report found that smoking was related to lung cancer, chronic bronchitis, emphysema, cardiovascular diseases, and cancer of the larynx. The report also concluded that "overwhelming evidence indicates that smoking -- its beginning, habituation, and occasional discontinuation -- is to a large extent psychologically and socially determined." Id. at 2357. Public response to the report was "immediate and vocal." Palmer v. Liggett Group, supra, 825 F.2d at 622. "[I]n a rush to protect and inform [their] citizens," several states adopted mandatory warning labels for cigarette packages. Ibid.

The Federal Trade Commission also responded to the Surgeon General's Advisory Committee report by immediately issuing

a notice of proposed rulemaking that would have required a warning to be placed both on packages of cigarettes and in all advertising. See Banzhaf v. F.C.C., 405 F.2d 1082, 1089 (D.C.Cir.1968), cert. denied, 396 U.S. 842, 90 S. Ct. 50, 24 L. Ed. 2d 93 (1969). Concerned about the potential maze of conflicting regulations, Congress intervened in 1965 to set up a uniform system of warning labels for cigarettes.

Among the significant provisions of the Cigarette Act is the statement of policy and purpose, which originally provided:

It is the policy of the Congress, and the purpose of this chapter, to establish a comprehensive Federal program to deal with cigarette labeling and advertising with respect to any relationship between smoking and health, whereby --

(1) The public may be adequately informed that cigarette smoking may be hazardous to health by inclusion of a warning to that effect on each package of cigarettes; and

(2) commerce and the national economy may be (A) protected to the maximum extent consistent with this declared policy and (B) not impeded by diverse, nonuniform, and confusing cigarette labeling and advertising regulations with respect to any relationship between smoking and health. [15 U.S.C. § 1331.]

Changes to subsection (1) made in 1984 are not relevant to this appeal.

Section 1333 of the Cigarette Act prescribes the exact language to be placed on the warning label. The label required in the original 1965 enactment was: "Warning: The Surgeon General Has Determined That Cigarette Smoking May Be Dangerous To Your Health." 15 U.S.C. § 1333 (1965). That warning was subsequently strengthened in 1970 to read: "Warning: The Surgeon General Has Determined That Cigarette Smoking Is Dangerous To Your Health." 15 U.S.C. § 1333 (1970). A 1984 revision to that section requires four rotating warnings that specifically describe the hazards attendant to smoking. 15 U.S.C. § 1333 (1984). Thus, the tentative message of the 1965 warning has been replaced by stronger assertions of the dangers of smoking.

Also relevant is the Cigarette Act's preemption section, which provided originally that "no statement relating to smoking and health, other than the statements required by section 1333 of

this title, shall be required on any cigarette package." 15 U.S.C. § 1334. That preemption provision was amended in 1970 to include additional language:

(b) No requirement or prohibition based on smoking and health shall be imposed under State law with respect to the advertising or promotion of any cigarettes the packages of which are labeled in conformity with the provisions of this chapter.

-C-

Because we do not write on a clean slate, we briefly examine the slate as it comes to us, beginning with the Third Circuit's decision in Cipollone v. Liggett Group, supra, 789 F.2d 181. There the court began its analysis by upholding the district court's conclusion that the preemption provision contained in 15 U.S.C. § 1334 did not expressly preempt plaintiff's state common-law claims. Id. at 185. The court explained that although the preemption provision explicitly prohibits states and federal agencies from requiring any additional warning on cigarette packages, no language refers to the viability of state common-law claims. Id. at 185-86. That lack of express guidance, combined with the strong presumption against preemption where state police powers are involved, see Maryland v. Louisiana, 451 U.S. 725, 746, 101 S. Ct. 2114, 2128, 68 L. Ed. 2d 576, 595 (1981), militated against a finding of express preemption. Id. at 186; accord Roysdon v. R.J. Reynolds Tobacco Co., 849 F.2d 230, 234 (6th Cir.1988); Palmer v. Liggett Group, supra, 825 F.2d at 625.

Consequently, the court examined the principles of implied preemption. As a preliminary matter, the court observed that although informative, the "vast" legislative history of the Cigarette Act was not "wholly dispositive of the issue." 789 F.2d at 186. According to the court, the language of the statute was "itself a sufficiently clear expression of congressional intent," making resort to the Act's legislative history unnecessary. Ibid.

The Third Circuit focused first on the form of implied preemption commonly known as "occupation of the field." Although Congress clearly intended to occupy a field, as evidenced in both the preemption provision and the statement-of-purpose section of the Act, the court found that the scheme created is not "'so pervasive' [n]or the federal interest 'so dominant' as to eradicate all of the Cipollones' claims." Ibid. The court was also unpersuaded that the object of the Act and the character of obligations imposed by it "reveal a purpose to exert exclusive control over every aspect of the relationship between cigarettes and health." Ibid. Critical to that finding was the need for a ...


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