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Smith v. R.J. Reynolds Tobacco Co.

Decided: August 9, 1993.


On appeal from the Superior Court of New Jersey, Law Division, Middlesex County.

Havey, Stern and Brochin. The opinion of the court was delivered by Stern, J.A.D.


This appeal requires us to consider, for the first time, the standards for permitting an attorney to withdraw, for "an unreasonable financial burden," from litigation commenced under a contingency agreement.

In the spring of 1983, the law firms of Budd Larner Gross Rosenbaum Greenberg and Sade, P.C. (Budd Larner), Wilentz, Goldman and Spitzer (Wilentz), and Porzio, Bromberg and Newman (Porzio) entered into an agreement whereby the three firms were to jointly prosecute actions against cigarette manufacturers and members of the tobacco manufacturing institute on behalf of smokers who allegedly developed lung cancer as a consequence of smoking cigarettes. The firms thereafter entered into contingency fee retainer agreements with their respective clients to prosecute eight lawsuits, including Cipollone v. Liggett Group, Inc. and the case which forms the basis of this appeal.

The agreement between the three firms continued until 1986, when Marc Z. Edell left Porzio and joined the Budd Larner firm. Subsequently, Budd Larner and Wilentz jointly prosecuted all but one of the cases. That case was prosecuted by Budd Larner alone.*fn1

The complaint in this case was filed in September 1984. The case was initially removed to federal court but was remanded to the Law Division in December 1986. Thereafter relatively little of substance related to the peculiar facts of this case occurred, initially because of stays entered pending litigation concerning the ability of the Wilentz firm to remain in the various cases. See Dewey v. R.J. Reynolds Tobacco Co., 109 N.J. 201, 536 A.2d 243 (1988) (Dewey I).

On January 3, 1989, almost a year following the decision of our Supreme Court in Dewey I, a consent order was entered which stayed all proceedings in the three State court cigarette cases pending appellate consideration of issues relating to pre-emption of state law claims by various federal statutes and the impact of our new Products Liability Law, N.J.S.A. 2A:58C-1 to -7. See Dewey v. Brown & Williamson Tobacco, 225 N.J. Super. 375, 542 A.2d 919 (App.Div.1988), aff'd in part and rev'd in part, sub nom. Dewey v. R.J. Reynolds Tobacco Co., 121 N.J. 69, 577 A.2d 1239 (1990) (Dewey II). In the interim, additional disqualification applications were being heard following the Dewey I decision, and the consent order was thereafter extended on October 5, 1989, "pending determination of the disqualification issue at which time the court will hear further arguments regarding whether the stay should continue."

On August 9, 1990, the trial Judge (to whom the matter was assigned for all purposes) denied defendants' motion to disqualify Wilentz as counsel in this and two other cases including Barnes v. R.J. Reynolds Tobacco Co. The order also continued the stay of the proceedings but allowed for a de bene esse deposition to preserve the testimony of plaintiff Doris Smith. Ms. Smith, however, died on August 31, 1990, before her testimony was taken.

We granted leave to appeal the order which allowed the Wilentz firm to represent the Smiths and other plaintiffs, and affirmed the decision on March 7, 1991. Barnes v. R.J. Reynolds Tobacco Co.,

Because the United States Supreme Court had granted certiorari in one of the related cases, see Cipollone v. Liggett Group, Inc., 499 U.S. 935, 111 S. Ct. 1386, 113 L. Ed. 2d 443 (1991), the trial Judge subsequently decided to continue the stay until that Court rendered its controlling decision relating to the viability and preemption of the similar claims advanced in that federal case under New Jersey law. On June 24, 1992, the United States Supreme Court rendered its decision. See Cipollone v. Liggett Group, Inc., 505 U.S. , 112 S. Ct. 2608, 120 L. Ed. 2d 407 (1992). Thereafter, on September 11, 1992, a status conference was conducted and on November 5, 1992, the Judge entered an order which established dates for the filing of briefs detailing the facts and legal theories on which the parties intended to rely. Oral argument was scheduled for March 8, 1993.

However, by motion dated December 2, 1992, Budd Larner and Wilentz filed a joint notice of motion for leave to withdraw as counsel in this matter. The motion was directed to appellants, who have been identified as co-executors or co-administrators of the estate of plaintiff Doris Smith.*fn3 The firms argued that the costs of maintaining this suit were unreasonably burdensome upon them and that they should be allowed to withdraw as counsel in this matter pursuant to RPC 1.16(b)(5).*fn4 The motion was granted

and we granted leave to appeal. We also granted leave for defendants to intervene on their assumption that they are not entitled to be heard as of right on this dispute. They take no position on the merits of the firm's withdrawal applications but dispute the suggestion of dilatory tactics on their part.

Affidavits submitted in support of the withdrawal motion reveal certain uncontested facts. According to Alan M. Darnell, Esq., of Wilentz, "in excess of 20,000 hours have been expended on the tobacco litigation by various attorneys and paralegals employed by the Wilentz firm. Had this time been billed at hourly rates, it would have had a value in excess of $1,750,000. In addition [Wilentz] has spent in excess of $700,000 in direct expenditures" as of November 30, 1992. Edell certified that Budd Larner and Wilentz incurred "more than $1 million in out-of-pocket expenses (not including the costs of more than one million Xerox copies made in-house) and more than $5 million in lawyer and paralegal time" on the eight cases.*fn5 No breakdown has been provided to show what part of this expenditure of time and money was devoted specifically to the present case. In view of the procedural history which we have summarized, we presume that amount is relatively small.

According to Edell, preparation of the eight related cases (of which the present case is one) required the firms to take eighty days of fact witness depositions on behalf of plaintiffs, and "produced 222 days of fact witness depositions by defendants." Twenty-seven days of expert witness depositions were taken by plaintiffs, while defendants engaged in seventy days of expert witness depositions. Edell further certified that for every day of deposition, the firms had to spend approximately one-and-a-half days in preparation and "[i]n total, the deposition process has taken about a thousand days or four years (Monday through Friday) to complete."

In the lead case of Cipollone, over 100 motions were filed, and most of the motions were argued. There were also four interlocutory applications, one resulting in the grant of an appeal and initial decision on preemption, Cipollone v. Liggett Group, Inc., 789 F. 2d 181 (3d Cir.1986), an appeal from the final judgment to the Court of Appeals following a trial of about four months, Cipollone v. Liggett Group, Inc., 893 F. 2d 541 (3d Cir.1990), and two petitions for certiorari to the Supreme Court of the United States, one of which was granted resulting in the argument before that Court. The firms claim they have advanced over $500,000 in out-of-pocket expenses and approximately $2,000,000 in lawyer and paralegal time in connection with the Cipollone trial and over $150,000 in out-of-pocket expenses and over $900,000 in attorney and paralegal time in post-trial proceedings.

According to Wilentz and Budd Larner, much work needs to be done in order to prepare this case for trial. Defendants have not yet revealed their anticipated expert witnesses. However, Edell estimates that defendants will name approximately twenty-four experts who will have to be deposed. Edell also contemplates the possibility of retaining new "state-of-the-art and risk/utility experts." According to Darnell,

although an incredible amount of time, effort, and money has been expended in the tobacco litigation to date, much work remains to be done to finish this lawsuit . . . . [T]wenty-two depositions of persons acquainted with Mrs. Smith have been taken to date. The defendants then contemplated taking at least another ten depositions,

including the contemplated completion of the depositions of Leroy and Doris Smith. The depositions of Mr. and Mrs. Smith cannot be taken because both are deceased.

A review of R.J. Reynolds' chart demonstrates that many treating physicians [will] be deposed, many expert witnesses will be named, their reports obtained, and thereafter deposed. With regard to document discovery, plaintiffs' counsel has reviewed over 600,000 documents produced by R.J. Reynolds; some 50,000 documents have been selected for copying by plaintiff's counsel. Document discovery from American Brands is incomplete and would have to be completed as part of the trial preparation process. Depositions of various employees of both R.J. Reynolds and the American Tobacco Co. would have to be taken.

Edell has contacted Richard Daynard, Chairman of the Tobacco Products Liability Project in Boston, which is "a clearinghouse for all lawyers who are prosecuting smoking and health litigation throughout the country," in an effort to enlist the Project's assistance in helping to find replacement counsel for plaintiffs in the instant matter. As of November 1992, Daynard "was unable to identify anyone who would be willing to undertake the representation of plaintiff in this case," in spite of the willingness of both Budd Larner and Wilentz to "forgo reimbursement for its expenses" incurred in the prosecution of the case. Darnell's certification also reflects that "[i]n order to facilitate the retention of substitute counsel by the ...

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