Iron Workers Local Union No. 17 v. Philip Morris, 1:97-CV-1422.

29 F.Supp.2d 825

IRON WORKERS LOCAL UNION NO.17 INSURANCE FUND and Its Trustees, et al., Plaintiffs, v. PHILIP MORRIS INCORPORATED, et al., Defendants.

No. 1:97-CV-1422.

United States District Court, S.D. Ohio, Eastern Division.

December 2, 1998.

Eben O. McNair, Timothy Joseph Gallagher, Schwarzwald & Rock, Cleveland, OH, Jack Landskroner, Monica Zunt, Landskroner Law Firm, Cleveland, OH, John M. Broaddus, Robert J. Connerton, Connerton, Ray & Simon, Washington, DC, Michael C. Spencer, Milberg, Weiss, Bershad, Hynes & Lerach, New York, NY, Patrick J. Coughlin, Frank J. Janecek, Jr., Scott H. Saham, Milberg, Weiss, Bershad, Hynes & Lerach, San Diego, CA, Paul J. Pennock, Jerry Kristal, Weitz & Luxenberg, New York, NY, Lembhard G. Howell, Richard G. Piccioni, C. Cleveland Stockmeyer, Michael E. Withey, Paul L. Stritmatter, Philip G. Arnold, Kevin Coluccio, Keith L. Kessler, J. Murray Kleist, Stritmatter, Kessler, Whelan & Withey, Seattle, WA, George Kargianis, Kargianis, Watkins, Marler, Seattle, WA, Roger M. Adelman, Washington, DC, G. Robert Blakey, Notre Dame Law School, Notre Dame, IN, Einer R. Elhauge, Harvard Law School, Cambridge, MA, Mitchell M. Breit, Karen J Sabine, Weitz & Luxenberg, New York, NY, for Local 17 Intern. Assn of Bridge, & Iron Workers Insurance Fund, Local 38 International Brotherhood of Electrical Workers, Ohio Laborers Insurance Fund, Dealers-Unions Insurance Fund, and Its Trustees, Philip M. Zannella, Jr., Gary S. Adams and Mark A. Frey, Local 47 Welfare Fund No. 1, and Its Trustees Michael P. Murphy, Mark Davis, Dennis Dingow, Cheryl DeLauer, Martin Presser, Fred A. Scharler, Robert Pfhal and Richard Green, Toledo Electrical Welfare Fund, and Its Trustees, Todd Michaelson, Dennis C. Duffey, Jerry R. Porter, Thomas J. Sigurdson, Gerald W. Hasley, Robert Colgan, Jr., James J. Kozlowski and Patrick J. Jones, plaintiffs.

Lawrence R. Desideri, Thomas J. Frederick, Dan K. Webb, Kevin J. Narko, Bradley E. Lerman, Winston & Strawn, Chicago, IL, Hugh E. McKay, Robert D. Anderle, Porter, Wright, Morris & Arthur, Cleveland, OH, for Philip Morris, Inc. defendant.

Roger Allen Hipp, Jones, Day, Reavis & Pogue, Cleveland, OH, Matthew A. Kairis, Jeffrey J. Jones, Melanie S. Fahey, Jones, Day, Reavis & Pogue, Columbus, OH, Daniel F. Kolb, Davis, Polk & Wardwell, New York, NY, for RJR Nabisco, Inc., RJR Nabisco Holdings Corp., defendants.

Roger Allen Hipp, Jones, Day, Reavis & Pogue, Cleveland, OH, Matthew A. Kairis, Jeffrey J. Jones, Melanie S. Fahey, Jones, Day, Reavis & Pogue, Columbus, OH, Peter J. Biersteker, Jones, Day, Reavis & Pogue, Washington, DC, for R.J. Reynolds Tobacco Co., defendant.

Phillip J. Campanella, Calfee, Halter & Griswold, Cleveland, OH, Kenneth N. Bass, Paul Taylor, James C. Munson, Kirkland & Ellis, Washington, DC, for Brown & Williamson Tobacco Corp., American Tobacco Co., defendants.

John Winship Read, Amanda Martinsek, Vorys, Sater, Seymour & Pease, Cleveland, OH, for British American Tobacco Co., Ltd.

Percy Squire, Lloyd Pierre-Louis, Bricker & Eckler, Columbus, OH, Thomas D. Lambros, Janik & Forbes, Cleveland, OH, Mark G. Cunha, Patrick D. Bonner, Jr., Randall Rainer, Simpson, Thacher & Bartlett, New York, NY, for B.A.T. Industries P.L.C., defendant.

Craig E. Gustafson, Gary R. Long, William J. Crampton, Bruce R. Tepekian, Shook, Hardy & Bacon, Kansas City, MO, Samuel R. Martillotta, Mansour, Gavin, Gerlack & Manos, Cleveland, OH, Patrick M. McLaughlin, John F. McCaffrey, McLaughlin & McCaffrey, Cleveland, OH, for Lorillard Tobacco Co., defendant.

Thomas P. Meaney, Jr., Kenneth J. Walsh, Tyler Lee Mathews, McDonald, Hopkins, Burke & Haber, Cleveland, OH, Marc E. Kasowitz, Marie V. Santacroce, Michael M. Fay, Julie R. Fischer, Marie V. Santocroce, Kasowitz, Benson, Torres & Friedman, New York, NY, for Liggett Group, Inc., defendant.

Steven D. Bell, Ulmer & Berne, Cleveland, OH, for U.S. Tobacco Sales and Marketing Co., defendant.

David J. Hooker, Thomas J. Collin, Robert Francis Ware, Jr., Thompson, Hine & Flory, Cleveland, OH, Steven Klugman, Harry Zirlin, Anne E. Cohen, Debevoise & Plimpton, New York, NY, for Tobacco Research U.S.A., Inc., defendant.

Charna E. Sherman, David J. Michalski, James M. Drozdowski, Kathleen Balthrop Havener, Hahn, Loeser & Parks, Cleveland, OH, for Tobbacco Institute, defendant.

Susan V. Belanger, Arter & Hadden, Cleveland, OH, John P. Gartland, Arter & Hadden, Columbus, OH, Michael C. Lasky, Davis & Gilbert, New York, NY, Hill & Knowlton, Inc., pro se, for Hill & Knowlton, Inc., defendant.

Timothy D. Johnson, Forrest A. Norman, III, Weston, Hurd, Fallon, Paisley & Howley, Cleveland, OH, for Smokeless Tobacco Council, Inc., defendant.

OPINION AND ORDER

GWIN, District Judge.

On September 24, 1998, defendants moved this Court to certify its September 10, 1998 order for interlocutory review pursuant to 28 U.S.C. § 1292(b) [Doc. 253].¹ On October 28, 1998, defendants also filed a motion requesting the Court to certify for interlocutory review its order certifying this case as a class action.²

Because defendants had filed motions for summary judgment and because this Court's decision on those motions might substantially affect the need for certification and the scope of certification, the Court delayed ruling upon defendants' motions for certification. On November 23, 1998, this Court granted defendants' motion for summary judgment as to plaintiffs' federal and state antitrust claims on the statute of limitations grounds. The Court also granted defendants' motion for summary judgment as to plaintiffs' claim for punitive damages. The Court otherwise denied the remainder of defendants' motions for summary judgment.

The Court now examines defendants' motions to certify this action for interlocutory review pursuant to 28 U.S.C. § 1292(b). Because the Court finds that there can be no substantial ground for a difference of opinion on plaintiffs' right to a trial on the remaining claims, and because an immediate appeal would hinder the end of this litigation, the Court denies defendants' motions to certify certain questions for interlocutory review.

I. Procedural background

The plaintiffs are certain trusts organized to provide health-related benefits to workers and their families.³ The representative plaintiffs are six jointly-administered, multi-employer health and welfare trust funds in the state of Ohio. The class consists of approximately 100 other similarly-situated health and welfare trusts, all in Ohio.⁴ Both the named plaintiffs and the members of the certified class are nonprofit, tax-exempt trusts organized under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1100.01 et seq., and the Taft-Hartley Act, 29 U.S.C. § 186(c)(5).

On May 20, 1997, Plaintiff Funds brought this action against tobacco-related entities.⁵ Plaintiffs allege that since about 1953, the defendants illegally shifted the large health care costs of smoking onto plaintiffs, proposed class members, and other health care payers. Plaintiff Funds contend the defendants expected, foresaw, and planned this shift of expenses. Plaintiffs further allege that as the direct result of the defendants' wrongdoing, plaintiffs and other similar trust funds had to make substantial expenditures to pay for treatment of smoking-related illnesses and addiction.

In their First Amended Complaint, Plaintiff Funds stated eighteen (18) counts against the defendants. To date, three (3) counts remain for adjudication.⁶ In Count I of the Amended Complaint, plaintiffs make claim under the Federal Racketeer Influenced and Corrupt Organizations Act of 1970, also known as RICO. 18 U.S.C. § 1961 et seq. In Count XIV, plaintiffs make claim under the Ohio equivalent of RICO, the Ohio Pattern of Corrupt Activity Act ("Ohio Corrupt Activities Act"), Ohio Rev.Code §§ 2923.31 et seq. In Count XI of the Amended Complaint, plaintiffs make a state law claim of civil conspiracy.⁷

In this case, Plaintiff Funds seek to recover costs incurred because of the defendants' alleged wrongful conduct. The Funds characterize their damages as economic losses arising from the "diminishment and expenditure of Fund assets" paid to provide medical treatment for tobacco-related illnesses. Plaintiff Funds also seek treble damages on their federal and state RICO claims, injunctive and declaratory relief, including disgorgement, and restitution and punitive damages.

At an early case management conference, and after party participation, this Court set this case for trial on February 22, 1999.

Since filing this action, the parties have completed the broad majority of discovery needed to prepare for trial. The parties have conducted more than 120 depositions. The parties have identified experts and provided extensive reports. The parties also have taken or have scheduled the depositions of experts. The plaintiffs have expended large effort and have identified more than 3,000 trial exhibits. While much work remains, the heavy lifting has been done.

A. Motion to Dismiss

On January 8, 1998, defendants filed a motion to dismiss this action pursuant to Fed.R.Civ.P. 12(b)(6) [Doc. 27]. On September 10, 1998, this Court generally denied the defendants' motion to dismiss this case [Doc. 234].⁸

In their motion to dismiss for failure to state claims upon which relief might be given, defendants made the general defense that plaintiffs' claims were too remote to allow recovery under federal and state RICO law. Defendants also asserted defenses to individual claims made by plaintiffs.⁹ Defendants relied upon Holmes v. Securities Investor Protection Corp., 503 U.S. 258, 112 S.Ct. 1311, 117 L.Ed.2d 532 (1992).

Under the circumstances of the Holmes case, the Supreme Court found that plaintiffs in a RICO action must show not only a direct injury but also must show that defendant's conduct was a proximate cause of plaintiffs' injury. The Court stated:

Here we use "proximate cause" to label generically...