APPEAL from a judgment and order of the Superior Court of Los Angeles County, Susan Bryant-Deason, Judge. (Los Angeles County Super. Ct. No. BC249171)
The opinion of the court was delivered by: Croskey, J.
CERTIFIED FOR PUBLICATION
Philip Morris USA, Inc. (Philip Morris), appeals a judgment awarding Jodie Bullock $13.8 million in punitive damages after a jury trial. A jury previously had awarded $850,000 in compensatory damages. Philip Morris contends the punitive damages award is barred by res judicata as a result of the settlement of an action by the California Attorney General against Philip Morris and other cigarette manufacturers, and the award is unconstitutionally excessive. Philip Morris also challenges the award of prejudgment interest from the date of the verdict. We conclude that each of these contentions is without merit.
This action involves a different cause of action from the prior action by the Attorney General so res judicata is inapplicable. In addition, Philip Morris's conduct in intentionally deceiving smokers and the public in general for several decades concerning the adverse health effects of cigarette smoking, while formulating its cigarettes so as to make them more addictive, and aggressively advertising to youths and others before July 1, 1969, was extremely reprehensible. In light of such extreme reprehensibility, including the vast scale and profitability of Philip Morris's misconduct, and its strong financial condition, the $13.8 million in punitive damages, approximately 16 times the compensatory damages award, is not unconstitutionally excessive. Finally, the trial court properly awarded prejudgment interest from the date of the verdict pursuant to Civil Code section 3287, subdivision (a) and rule 3.1802 of the California Rules of Court. In light of these conclusions, we will affirm the judgment and the order awarding prejudgment interest.
FACTUAL AND PROCEDURAL BACKGROUND
1. Factual Background*fn1
Betty Bullock smoked cigarettes manufactured by Philip Morris for 45 years from 1956, when she was 17 years old, until she was diagnosed with lung cancer in 2001. She smoked Philip Morris's Marlboro brand of cigarettes until 1966, and then switched to its Benson & Hedges brand. She died in February 2003.
Scientific and medical professionals in the United States and worldwide generally agreed by the late 1950's that cigarette smoking caused lung cancer, after several epidemiological studies reached that conclusion. Philip Morris and other cigarette manufacturers sought to cast doubt on the increasing body of knowledge supporting the conclusion that smoking caused lung cancer and sought to assuage smokers' concerns. To that end, Philip Morris and other cigarette manufacturers issued a full-page announcement in newspapers throughout the United States in January 1954 entitled "A Frank Statement to Cigarette Smokers." The announcement stated, "Recent reports on experiments with mice have given wide publicity to a theory that cigarette smoking is in some way linked with lung cancer in human beings," and stated that "[d]istinguished authorities point[ed] out" that there was no proof that cigarette smoking caused cancer and that "numerous scientists" questioned "the validity of the statistics themselves."
The Frank Statement stated, "We accept an interest in people's health as a basic responsibility, paramount to every other consideration in our business. [¶] We believe the products we make are not injurious to health. [¶] We always have and always will cooperate closely with those whose task it is to safeguard the public health." It announced the formation of the Tobacco Industry Research Committee and stated, "We are pledging aid and assistance to the research effort into all phases of tobacco use and health. This joint financial aid will of course be in addition to what is already being contributed by individual companies. [¶] . . . [¶] In charge of the research activities of the Committee will be a scientist of unimpeachable integrity and national repute. In addition there will be an Advisory Board of scientists disinterested in the cigarette industry. A group of distinguished men from medicine, science, and education will be invited to serve on this Board. These scientists will advise the Committee on its research activities." In the years that followed, the Tobacco Industry Research Committee and its publicists disseminated the message that there was no proof that cigarette smoking was a cause of lung cancer and other diseases through news releases, distribution of research and editorial materials favorable to the tobacco industry, personal contacts with editors, journalists, and producers, and other means.
Philip Morris for many years publicly continued to insist that there was no consensus in the scientific community that cigarette smoking was a cause of lung cancer and that Philip Morris was actively pursuing scientific research to resolve the purported controversy, while privately acknowledging that there was no true controversy, that its true goal was to discredit reports that linked smoking with lung cancer, and that it had no intention of funding research that would reveal the health hazards of smoking. The Tobacco Institute, a trade organization funded by Philip Morris and other cigarette manufacturers, issued a press release in 1961 discrediting a recent article and stating that the views that smoking caused cancer "are a subject of much disagreement in the scientific world" and "the cause or causes of lung cancer continue to be unknown." The Tobacco Institute stated in a press release in 1963 that the tobacco industry was "vitally interested in getting the facts that will provide answers to questions about smoking and health," and described the industry's research efforts as a "crusade for research - in the agricultural stations, the scientific laboratories, and the great hospitals and medical centers of the nation." It stated, "the industry does not know the causes of the diseases in question."
A cigarette company executive appearing before Congress in 1965 on behalf of several cigarette manufacturers, including Philip Morris, stated that "[n]early everyone familiar with these difficult problems will agree . . . that there is a very high degree of uncertainty" whether "smoking causes cancer or any other disease." Later that year, the Tobacco Institute issued a press release stating, "Research to date has not established whether smoking is or is not causally involved in such diseases as lung cancer and heart disease, despite efforts to make it seem otherwise. The matter remains an open question--for resolution by scientists." The press release stated, "we are earnestly trying to find the answers," and, "If there is something in tobacco that is causally related to cancer or any other disease, the tobacco industry wants to find out what it is, and the sooner the better. If it is something in tobacco or the smoke, I am sure this can be remedied by the scientists."
Philip Morris's chief executive officer and chairman of the Executive Committee of the Tobacco Institute, Joseph Cullman III, stated on the television news program Face the Nation (CBS, Jan. 3, 1971), "if any ingredient in cigarette smoke is identified as being injurious to human health, we are confident that we can eliminate that ingredient." He stated further, "We do not believe that cigarettes are hazardous; we don't accept that." The Tobacco Institute issued a report in 1979 entitled Smoking and Health 1969-1979: the Continuing Controversy, stating, "Scientists have not proven that cigarette smoke or any of the thousands of its constituents as found in cigarette smoke cause human disease." The Tobacco Institute issued a report in 1984 entitled The Cigarette Controversy: Why More Research is Needed, and emphasized that "it is not known whether smoking has a role in the development of various diseases . . . a great deal more research is needed to uncover the causes and the mechanisms involved in their onset." The 1984 report stated that the theory that cigarette smoking causes various diseases "is just that, a theory" and stated, "There were basic flaws in the methods used in the major epidemiological surveys that cast doubts on the accuracy of the claimed correlations."
Contrary to its repeated public pronouncements, Philip Morris privately acknowledged the link between cigarette smoking and lung cancer and other diseases and sought to avoid promoting any research that would reveal that link. An internal document prepared by Philip Morris in 1961 for purposes of research and development stated, "Carcinogens are found in practically every class of compounds in smoke," and provided a "partial list" of 40 "carcinogens" in cigarette smoke.
A 1970 memorandum from a Philip Morris research scientist to its president stated of the Council for Tobacco Research, the successor of the Tobacco Industry Research Committee, "It has been stated that CTR is a program to find out 'the truth about smoking and health.' What is truth to one is false to another. CTR and the Industry have publicly and frequently denied what others find as 'truth.' Let's face it. We are interested in evidence which we believe denies the allegation that cigarette smoking causes disease." Notes from a 1978 meeting of cigarette company executives and legal counsel state that the Tobacco Industry Research Committee "was set up as an industry 'shield' " and that the Council for Tobacco Research "has acted as a 'front.' "
Dr. William Farone, a chemist employed by Philip Morris as a scientific researcher beginning in 1976 and as Director of Applied Research from 1977 to 1984, testified at trial that scientists working for Philip Morris knew that cigarette smoking caused cancer many years before he began to work for the company. Dr. Farone testified that during his years at Philip Morris there was no controversy among its scientists as to whether smoking caused diseases, and that public statements that it was not known whether smoking played a role in the development of various diseases and that a great deal more research was needed to identify the causes of the diseases were false. He testified that another public statement challenging the epidemiological research as inconclusive was a misleading half-truth and that Philip Morris's scientists knew that cigarette smoke contained carcinogens and that the carcinogens caused cancer.
Dr. Farone testified that Dr. Thomas Osdene, Philip Morris's Director of Research, and others told him on several occasions that Dr. Osdene's real job and the job of scientists working under him was to maintain the appearance of a scientific controversy concerning smoking and health. Moreover, Dr. Farone testified that Philip Morris performed no animal toxicity studies of cigarettes in the United States, pursuant to a "gentleman's agreement" with other cigarette manufacturers, but arranged for a company in Germany to perform toxicity tests on animals there. Other Philip Morris scientists explained to Dr. Farone that the reason for testing cigarettes abroad was so the results would not be available by subpoena in the United States. The test results were sent to Dr. Osdene, usually at his home, who would report the results to other Philip Morris scientists verbally and destroy the written records.
Philip Morris conducted animal research in the United States on the addictive effects of nicotine in the early 1980's. It sought to develop a substitute for nicotine that would produce the same addictive effects but without the adverse cardiovascular effects of nicotine. Philip Morris closely guarded the results of its research and threatened to sue its former scientists who proposed publication of an article. Philip Morris successfully developed nicotine analogs and had the ability to remove nicotine from cigarettes, but did not do so. Moreover, Philip Morris added urea to cigarettes, which becomes ammonia when heated, to enhance the effect of nicotine. Philip Morris added approximately 250 different substances to tobacco in cigarettes to enhance the flavor and for other purposes. A former Philip Morris research scientist who worked for the company in the early 1980's testified, "Never once in my whole time at the company did I hear any concern for the customer, other than one scientist who was complaining that he was repeatedly--repeatedly having his research changed in direction any time he came upon some hot research."
Philip Morris heavily advertised its cigarettes on television in the 1950's and 1960's, until the federal government banned cigarette advertising on television in 1970. Television advertising had a particularly strong influence on youths under the age of 18, for whom there was a positive correlation between television viewing time and the incidence of smoking. Philip Morris's print advertisements for Marlboro and other cigarette brands in 1956, when Bullock began smoking at the age of 17, and generally in the years from 1954 to 1969, depicted handsome men and glamorous young women. Some advertisements featured slogans such as "Loved for Gentleness" and " 'The gentlest cigarette you can smoke.' "
The Attorney General of California, on behalf of the People of California, and the California Director of Health Services filed a complaint against several cigarette manufacturers, including Philip Morris, and other tobacco industry organizations in 1997. They alleged that the defendants had conspired to deceive the public concerning the adverse health effects of smoking by suppressing truthful information and spreading disinformation. They also alleged that the defendants had specifically targeted minors in their advertising and marketing campaigns. The Attorney General and Director of Health Services alleged counts for (1) recovery of the value of Medi-Cal benefits provided to treat smoking-related injuries and illnesses (Welf. & Inst. Code, § 14124.71); (2) restraint of trade in violation of the Cartwright Act (Bus. & Prof. Code, § 16700 et seq.); (3) violation of the False Claims Act (Gov. Code, § 12650 et seq.) and (4) unfair competition (Bus. & Prof. Code, § 17200 et seq.). They sought compensatory and punitive damages, civil penalties and a permanent injunction. Similar actions were commenced against the same defendants in other states.
Philip Morris and other cigarette manufacturers entered into a Master Settlement Agreement (MSA) with 46 states, including California, in 1998 settling the civil litigation by the states against the manufacturers. The manufacturers denied the allegations of wrongdoing and admitted no liability, but agreed to several restrictions on the advertising and promotion of cigarettes. They also agreed to dissolve the Tobacco Institute, the Council for Tobacco Research, and the Council for Indoor Air Research, and agreed not to target youths as smokers or potential smokers, suppress research on the health hazards of smoking, or make any misrepresentation of fact concerning the health consequences of smoking. The participating cigarette manufacturers also agreed to pay several billion dollars per year to the states, with each manufacturer responsible for a portion of the total payment according to its market share. The trial court in the action by the Attorney General and the Director of Health Services entered a Consent Decree and Final Judgment (Consent Decree) in December 1998, incorporating the MSA.
Philip Morris issued a statement on its Internet site in December 1999 acknowledging for the first time, "There is an overwhelming medical and scientific consensus that cigarette smoking causes lung cancer, heart disease, emphysema and other serious diseases in smokers. Smokers are far more likely to develop serious diseases, like lung cancer, than non-smokers. There is no 'safe' cigarette. These are and have been the messages of public health authorities worldwide." The statement also acknowledged that cigarette smoking is addictive.
2. Trial Court Proceedings and Prior Appeal
Betty Bullock sued Philip Morris in April 2001 seeking to recover damages for personal injuries based on products liability, fraud and other theories. The jury returned a special verdict in September 2002 finding that there was a defect in the design of the cigarettes and that they were negligently designed; that Philip Morris failed to adequately warn Bullock of the dangers of smoking before July 1, 1969;*fn2 that it intentionally and negligently misrepresented material facts and made a false promise; that it intentionally concealed material facts before July 1, 1969; and that each of those acts of misconduct was a cause of Bullock's injury. The jury found that Philip Morris was guilty of malice, fraud or oppression with respect to each count. The jury awarded Bullock $850,000 in compensatory damages, including $100,000 in noneconomic damages for pain and suffering, and later awarded her $28 billion in punitive damages. The trial court entered a judgment on the jury verdict.
The trial court denied Philip Morris's motion for judgment notwithstanding the verdict and denied in part its motion for a new trial, but granted the new trial motion as to excessive damages, with the condition that the court would deny the new trial motion if Bullock consented to reduce the punitive damages award to $28 million. She consented to the reduction. The court entered an amended judgment in January 2003 awarding a total of $28,850,000 in compensatory and punitive damages. Both parties appealed the amended judgment. Betty Bullock died in February 2003.*fn3
On appeal, we concluded that the refusal of Philip Morris's proposed instruction prohibiting punishment for harm caused to others was error and that the punitive damages award therefore must be reversed, but that there was no error in the compensatory damages award or the finding of oppression, fraud or malice. (Bullock v. Philip Morris USA, Inc. (2008) 159 Cal.App.4th 655, 667, 693-695.) We therefore reversed the judgment as to the amount of punitive damages only and remanded the matter for a new trial limited to determining the amount of punitive damages.*fn4 (Id. at p. 702.)
The jury in the limited retrial returned a special verdict on August 24, 2009, awarding Bullock $13.8 million in punitive damages. The trial court entered an amended judgment on December 1, 2009, awarding $850,000 in compensatory damages, pursuant to the prior judgment, and $13.8 million in punitive damages. The court denied Philip Morris's motion for judgment notwithstanding the verdict. The court granted Bullock's motion for prejudgment interest on the punitive damages award from the date of the verdict. Philip Morris timely appealed the amended judgment and the order granting the motion for prejudgment interest.
Philip Morris contends (1) the Consent Decree bars any award of punitive damages in this case under the res judicata doctrine; (2) the $13.8 million punitive damages award is unconstitutionally excessive and (3) the award of prejudgment interest from the date of the verdict was error.
1. Res Judicata Is Inapplicable
Res judicata, or claim preclusion, precludes the relitigation of a cause of action that was litigated in a prior proceeding if three requirements are satisfied: (1) the present action is on the same cause of action as the prior proceeding; (2) the prior proceeding resulted in a final judgment on the merits and (3) the parties in the present action or parties in privity with them were parties to the prior proceeding. (Boeken v. Philip Morris USA, Inc. (2010) 48 Cal.4th 788, 797.) Res judicata not only precludes the relitigation of issues that were actually litigated, but also precludes the litigation of issues that could have been litigated in the prior proceeding. (Busick v. Workmen's Comp. Appeals Bd. (1972) 7 Cal.3d 967, 975; Amin v. Khazindar (2003) 112 Cal.App.4th 582, 589-590.)
For purposes of res judicata, a cause of action consists of the plaintiff's primary right to be free from a particular injury, the defendant's corresponding primary duty and the defendant's wrongful act in breach of that duty. (Mycogen Corp. v. Monsanto Co. (2002) 28 Cal.4th 888, 904 (Mycogen).) The violation of a primary right gives rise to only a single cause of action. (Ibid.) The plaintiff's indivisible primary right must be distinguished from both the legal theory on which the plaintiff seeks relief and the remedy sought. The plaintiff may seek various remedies based on different legal theories, all arising from a single cause of action. (Ibid.)
" '[T]he "cause of action" is based upon the harm suffered, as opposed to the particular theory asserted by the litigant. [Citation.] Even where there are multiple legal theories upon which recovery might be predicated, one injury gives rise to only one claim for relief. "Hence a judgment for the defendant is a bar to a subsequent action by the plaintiff based on the same injury to the same right, even though he presents a different legal ground for relief." [Citations.]' Thus, under the primary rights theory, the determinative factor is the harm suffered. When two actions involving the same parties seek compensation for the same harm, they generally involve the same primary right. [Citation.]" (Boeken v. Philip Morris USA, Inc., supra, 48 Cal.4th at p. 798.)
The primary right that Bullock seeks to vindicate in this action is based on her personal injuries. Those personal physical and emotional injuries differ from the economic injuries and injuries to market competition alleged by the Attorney General and the Director of Health Services in their complaint. We therefore conclude that this action involves a different primary right and a different cause of ...