Justia Federal District Court Opinions

This appeal is from a final judgment in a protracted products liability case in which the plaintiff, Antonio Cipollone, seeks to hold Liggett Group, Inc., Lorillard, Inc., and Philip Morris, Inc., three of the leading firms in the tobacco industry, liable for the death from lung cancer of his wife, Rose Cipollone, who smoked cigarettes from 1942 until her death in 1984. Jurisdiction is founded on diversity of citizenship, 28 U.S.C. Sec. 1332, and New Jersey law applies. In an earlier opinion in the case, Cipollone v. Liggett Group, Inc., 789 F.2d 181 (3d Cir.1986), cert. denied, --- U.S. ----, 107 S.Ct. 907, 93 L.Ed.2d 857 (1987), we held that the Federal Cigarette Labeling and Advertising Act ("Labeling Act"), 15 U.S.C. Secs. 1331-1340 (1982 & Supp. II 1984), which became effective January 1, 1966, preempted claims arising from smoking after January 1, 1966 (hereinafter post-1965) based upon the cigarette companies' advertising or promotion of cigarettes or upon the adequacy of their warnings as to the hazards of smoking.

Following that opinion, which stemmed from an interlocutory appeal, see 28 U.S.C. Sec. 1292(b), the case proceeded to a four-month long trial. At the conclusion of the trial, the jury, answering a series of special interrogatories, returned a verdict in the sum of $400,000.00 for the plaintiff in his individual capacity on the breach of express warranty claim. The jury also found the defendants strictly liable for failing to warn adequately of the hazards of their products, but returned a verdict in their favor on that claim because of Mrs. Cipollone's comparative fault. More precisely, the jury apportioned 80% of the responsibility for Mrs. Cipollone's injuries to her because of its finding that she knew and appreciated the damages of cigarette smoking and voluntarily chose to smoke.

Both sides have appealed, raising a plethora of issues. The prime defendant is Liggett Group, Inc. ("Liggett"), whose cigarettes Mrs. Cipollone smoked from 1942 to 1968. The briefs focus primarily on alleged errors in the district court's charge to the jury and on specific jury findings that may have preclusive effect. Considerable attention was also devoted to ancillary issues: the viability of the plaintiff's generic risk-utility theory of liability (the district court granted summary judgment for the defendants thereon); the failure of the district court to award plaintiff prejudgment interest; the district court's grant to plaintiff of partial summary judgment on defendants' statute of limitations defense; and the effect of our preemption decision on plaintiff's intentional tort claims (the district court held them to be preempted).

The most problematic issue on this appeal lies in the skewing effect on the trial of our interlocutory preemption decision, which created an artificial (although legally binding) time constraint on the determination of causation and liability. Under the aegis of that decision, the jury was forbidden to consider the effect of the defendants' post-1965 conduct and, concomitantly, could only consider whether a pre-1966 breach of warranty and failure to warn were the proximate cause of Mrs. Cipollone's smoking and death. However, the district court allowed the jury to consider Mrs. Cipollone's post-1965 smoking, on the theory that her post-1965 behavior was relevant to a comparative fault defense.

We conclude that the district court erred in permitting the jury to make a comparative fault determination based on Mrs. Cipollone's post-1965 behavior. Rather, the jury should have been instructed that Mrs. Cipollone's post-1965 conduct bore only on the apportionment of damages, but not on her comparative fault for her own injuries. Although in some respects the fairest and most natural approach would be to let the jury consider both sides' post-1965 conduct to the extent that it bears on apportionment of damages, that result would impermissibly impinge on the immunity from suit afforded the cigarette companies by the Labeling Act. Still, permitting the defendants to take advantage of Mrs. Cipollone's post-1965 conduct to escape liability altogether, particularly in the face of plaintiff's allegations that defendants engaged in post-1965 conduct designed to reassure smokers, creates an unacceptable imbalance.

The only way to give effect to our preemption decision and yet ensure fairness in the trial is to limit the evidence going to Mrs. Cipollone's comparative fault to her pre-1966 conduct. We find this result to be consistent with, and indeed compelled by, the New Jersey Supreme Court decision in Ostrowski v. Azzara, 111 N.J. 429, 545 A.2d 148 (1988). Thus, Mr. Cipollone is entitled to a new trial on his failure to warn claim.

Liggett's appeal on the express warranty claim presents an abstruse question about the nature of the reliance interest required by U.C.C. section 2-313, N.J.S.A. Sec. 12A:2-313. The attention we pay to this issue on appeal is somewhat ironic, given that the extensive trial focused on other theories of liability, particularly strict liability. The jury's verdict for the plaintiff on an express warranty theory makes our analysis necessary, however.

We conclude that the express warranty charge was flawed and that that portion of the verdict must also be set aside. Primarily, the district court erred to the extent that it prevented Liggett from proving, by a preponderance of the evidence, that Mrs. Cipollone did not believe the advertisements. The advertisements constitute an express warranty as long they constitute a basis of the bargain, that is, as long as Mr. Cipollone can prove that Mrs. Cipollone was aware of the advertisements and as long as Liggett does not prove that she disbelieved them.

We conclude that the district court did not err in barring a comparative fault defense to the express warranty claim because, on the facts of this case, it would have been impossible for Mrs. Cipollone to have known of the dangers of smoking and still have believed enough in Liggett's advertisements for them to constitute a warranty. In essence, the comparative fault issue collapses into the basis of the bargain issue. We further conclude that the district court did not err in denying Liggett's motion for judgment n.o.v., because there was sufficient evidence in the record to support conclusions that a warranty existed and was breached and that breach of that warranty proximately caused Mrs. Cipollone's cancer.

We reverse the district court's grant of summary judgment to defendants on plaintiff's generic risk-utility claim. Although our holding on this issue is subject to instant modification by the New Jersey Supreme Court, which presently has the issue before it, we find that the district court improperly granted defendant's motion for a directed verdict. Thus, plaintiff still has live claims against all three defendants in this case; although Mrs. Cipollone did not smoke cigarettes made by Lorillard and Philip Morris until after 1965 (hence absolving them from liability on the breach of express warranty and failure to warn claims), they remain potentially liable on the risk-utility claim, which does not implicate advertising, promotion or warnings. We also conclude that if Mr. Cipollone prevails on an express warranty claim on retrial, he is entitled to prejudgment interest. We reverse the district court's grant of partial summary judgment for the plaintiff on the statute of limitations issue because we conclude that there was a genuine issue of material fact as to whether, within the meaning of the New Jersey discovery rule, Mrs. Cipollone should have discovered the facts giving rise to her claim earlier. Finally, we agree with the district court that plaintiff's intentional tort claim is preempted by our previous decision.

Rose Cipollone was born in 1925 and began to smoke in 1942. She smoked Chesterfield brand cigarettes, manufactured by Liggett, until 1955. In her deposition, introduced into evidence at the trial, she stated that she smoked the Chesterfield brand to be "glamorous," to "imitate" the "pretty girls and movie stars" depicted in Chesterfield advertisements, and because the advertisements stated that Chesterfield cigarettes were "mild." Mrs. Cipollone stated that she understood the description of Chesterfield cigarettes as "mild" to mean that the cigarettes were safe.

Mrs. Cipollone also testified that she was an avid reader of a variety of magazines, frequently listened to the radio, and often watched television during the years that she smoked the Chesterfield brand. Although she could not specifically remember which Chesterfield advertisements she saw or heard during those years, Chesterfield advertisements appeared continuously in those media during that period. Several of these advertisements were introduced into evidence. The following copy appeared commonly in Chesterfield magazine advertisements during the year 1952:

PLAY SAFE Smoke Chesterfield.

NOSE, THROAT, and Accessory Organs not Adversely Affected by Smoking Chesterfields. First such report ever published about any cigarette. A responsible consulting organization has reported the results of a continuing study by a competent medical specialist and his staff on the effects of smoking Chesterfield cigarettes. A group of people from various walks of life was organized to smoke only Chesterfields. For six months this group of men and women smoked their normal amount of Chesterfields--10 to 40 a day. 45% of the group have smoked Chesterfields continually from one to thirty years for an average of 10 years each. At the beginning and at the end of the six-months period each smoker was given a thorough examination, including X-ray pictures, by the medical specialist and his assistants. The examination covered the sinuses as well as the nose, ears and throat. The medical specialist, after a thorough examination of every member of the group, stated: "It is my opinion that the ears, nose, throat and accessory organs of all participating subjects examined by me were not adversely affected in the six-month period by smoking the cigarettes provided."

5 J.A. 21, 22 (c. 1952).¹ The defendants stipulated that Mrs. Cipollone had seen many of these advertisements.

Television advertisements for the Chesterfield brand were also introduced into evidence. The Chesterfield cigarette was described as having "ingredients that make Chesterfield the best possible smoke as tested and approved by scientists from leading universities," 5 J.A. 37 (undated), and being manufactured with "electronic miracle" technology that makes "cigarettes ... more better [sic] and safer for you." 5 J.A. 39 (c. 1955). One advertisement stated "[n]ow Chesterfield is the first cigarette to present this scientific evidence on the effects of smoking--a medical specialist making regular bi-monthly examinations of a group of people from various walks of life--45% of this group have smoked Chesterfield's for an average of over 10 years--after 8 months, the medical specialist reports that he observed no adverse effects to the nose, throat and sinuses of the group who were smoking Chesterfield. I'd say that means real mildness." 5 J.A. 36 (undated).

Mrs. Cipollone testified that she frequently listened to the radio show "Arthur Godfrey and His Friends," sponsored by the Chesterfield brand. The Chesterfield brand was marketed on the show as follows (text read by Mr. Godfrey):

[Y]ou saw me read this last week but a lot of folks didn't and it's a very important message--especially those of you who smoke Chesterfields--you probably been wonderin' about this. You hear stuff all the time about "cigarettes are harmful to you" this and that and the other thing....

Here's an ad, you've seen it in the papers--please read it when you get it. If you smoke it will make you feel better, really.

"Nose, throat and accessory organs not adversely affected by smoking Chesterfield. This is the first such report ever published about any cigarette. A responsible consulting organization has reported the results of a continuing study by a competent medical specialist and his staff on the effects of smoking Chesterfield cigarettes.

"A group of people from various walks of life was organized to smoke only Chesterfields. For six months this group of men and women smoked their normal amount of Chesterfields--10 to 40 a day. 45% of the group have smoked Chesterfields continually from one to thirty years for an average of 10 years each.

"At the beginning and at the end of the six months period each smoker was given a thorough examination, including X-Ray pictures, by the medical specialist and his assistants. The examination covered the sinuses as well as the nose, ears and throat."

Now--here's the important thing. "The medical specialist, after a thorough examination of every member of the group, stated: 'It is my opinion that the ears, nose, throat and accessory organs of all participating subjects examined by me were not adversely affected in the six-months period by smoking the Chesterfield cigarettes provided.' "

Now that ought to make you feel better if you've had any worries at all about it. I never did. I smoke two or three packs of these things every day. I feel pretty good. I don't know, I never did believe they did you any harm and now, we've got the proof. So--Chesterfields are the cigarette for you to smoke, be they regular size or king-size.

5 J.A. 156 (Sept. 24, 1952).2

In 1955, Mrs. Cipollone stopped smoking Chesterfield cigarettes and began to smoke L & M filter cigarettes, also made by Liggett. In response to a question as to why she switched to the L & M brand, Mrs. Cipollone stated that "[w]ell, they were talking about the filter tip, that it was milder and a miracle it would keep the stuff inside a trap, whatever." When asked why she desired the filter tip, she testified that "it was the new thing and I figured, well, go along[, and that] it was better [because t]he bad stuff would stay in the filter then." When asked whether concern about the "bad stuff" was due to a concern about her health, she stated "[n]ot really.... It was the trend. Everybody was smoking the filter cigarettes and I changed, too."

She also stated that although she could not remember any specific advertisements, she did "recall the ads and ... remember the tips [and] the messages of a filter, a safer, something to that effect.... That it would filter the nicotine and the tar and the tobacco[, and t]hat it would be a cleaner and fresher smoke." Mrs. Cipollone also stated that she "recall[ed] seeing an ad that said doctors recommend you smoke ... I think it was L & M's.... [T]hrough advertising, I was led to assume that they were safe and they wouldn't harm me.... There was lots of advertising. There was advertising everywhere. There was advertising in magazines, on billboards, in newspapers."

Mr. Cipollone also introduced evidence as to how the L & M brand was marketed during the years that Mrs. Cipollone smoked that brand. One series of advertisements that appeared on television and in magazines at the outset of L & M's introduction to the public stated that L & M "miracle tip" filters were "just what the doctor ordered!"; the "just what the doctor ordered" phrase often appeared in a large bold typescript in magazine advertisements. The "miracle tip" was advertised as "remov[ing] the heavy particles, leaving you a Light and Mild smoke."

In 1968, Mrs. Cipollone stopped smoking the L & M brand and started smoking the Virginia Slims brand, manufactured by Philip Morris. She stated that she switched "because it was very glamorous and very attractive ads and it was a nice looking cigarette. That persuaded me." In the 1970's, Mrs. Cipollone switch to the Parliament brand, also manufactured by Philip Morris. She testified that this brand was advertised as having a "recessed" filter and that she thought that this made it healthier. In 1974, she changed from the Parliament to the True brand, a cigarette manufactured by Lorillard, Inc. ("Lorillard") and advertised as low tar, upon the advice of her doctor, who had told her son to stop smoking.

From 1942 until the early 1980's, Mrs. Cipollone smoked between one pack and two packs of cigarettes per day. The only exception to this pattern was that, at the urging of her husband, Mrs. Cipollone substantially reduced her smoking during her first pregnancy in the 1940's. In 1981, Mrs. Cipollone was diagnosed as having lung cancer, but even though her doctors advised her to stop smoking, she was unable to do so. Mrs. Cipollone continued to smoke until June of 1982 when her lung was removed. Even after that, she smoked occasionally, in secret. She testified that she was "addicted" to cigarette smoking and that it was terribly difficult for her to give it up. She stopped smoking in 1983 after her cancer had spread widely and she had become terminally ill. Mrs. Cipollone died on October 21, 1984.

Evidence was also introduced on the subject of Mrs. Cipollone's awareness of the health consequences of smoking cigarettes. Some of that evidence has already been alluded to: she switched to the L & M brand in part because she thought that brand safer than the Chesterfield brand, and she later switched to the Parliament and True brands out of concern for her health. In addition, from the beginning of the Cipollones' marriage in 1947, Mr. Cipollone repeatedly told his wife that she should stop smoking because it was unlady-like and bad for her health. When reports linking smoking with cancer and heart disease began to appear in the media, Mr. Cipollone repeatedly brought them to his wife's attention. Other members of the Cipollone family also told her that cigarette smoking was dangerous to her health and could cause cancer. After January 1, 1966, every package of cigarettes purchased by Mrs. Cipollone bore the Congressionally mandated warning labels.

There is also evidence that Mrs. Cipollone feared that her cigarette smoking would damage her health. When she developed a bad cough, her concern about the possible effect of smoking on her health led her, apparently prior to 1966, to make novenas to Saint Judge asking his intercession on her behalf to prevent her from developing cancer. There is also evidence, however, that Mrs. Cipollone disbelieved the reports linking cigarette smoking to cancer and other health problems. As explained above, there is evidence that she read the cigarette companies' advertisements, understood them as representing that the cigarettes were safe, and thus, as she put it, "was led to assume that [the cigarettes that I purchased] wouldn't harm me." She stated that she had often read cigarette company or Tobacco Institute statements, reported in articles about the health consequences of smoking or reproduced in advertisements, stating that the link between smoking and disease has not been proven. She also testified that because she found it so difficult to stop smoking, she "[m]aybe ... didn't want to believe" the reports that she heard that smoking caused cancer or other diseases and that she "didn't believe" that her smoking would cause her to contract lung cancer. In addition, Mrs. Cipollone stated that she believed that "[t]obacco companies wouldn't do anything that was really going to kill you."

On August 1, 1983, Mr. and Mrs. Cipollone filed a complaint in the district court for the District of New Jersey, founded on diversity of citizenship, seeking damages against Liggett, Philip Morris, and Lorillard for the suffering and monetary losses resulting from Mrs. Cipollone's lung cancer. The complaint alleged that the lung cancer resulted from Mrs. Cipollone's smoking of cigarettes manufactured by the named defendants.

On May 31, 1985, following Mrs. Cipollone's death, and suing in his capacity as Mrs. Cipollone's executor and on his own behalf, Mr. Cipollone filed a third amended complaint, upon which the case was tried. The third amended complaint included damages claims against each defendant based on the following theories of liability:³

1. Strict liability in tort (and negligence) on the theory that the defendants' failed to warn adequately (or negligently failed to warn adequately) of the health effects of smoking ("the failure to warn claim");

2. Strict liability in tort on the theory that the defendants marketed defectively designed cigarettes rather than alternatively designed, safer cigarettes ("the design defect claim");

3. Strict liability in tort on the theory that the health risks of the defendants' cigarettes exceeded their social utility ("the generic risk-utility claim");

4. Breach of express warranty regarding the health effects of smoking ("the express warranty claim");

5. Fraud and misrepresentation in the advertising and promotion of cigarettes from 1940 to 1983 ("the fraudulent misrepresentation claim");

6. Conspiracy to defraud the public regarding the health effects of smoking ("the conspiracy to defraud claim");

The defendants moved for summary judgment on the ground that the plaintiff's claims were preempted by the Federal Cigarette Labeling and Advertising Act, Pub.L. No. 89-92, 79 Stat. 282 (1965) (codified as amended at 15 U.S.C. Secs. 1331-1340 (1982 & Supp. II 1984)), a statute enacted in 1965 in the wake of the Surgeon General's historic report on the hazards of cigarette smoking. The Act required health warnings, as set forth in the statute and subsequently strengthened by statutory amendments, to be placed on cigarette packages. The effective date of the statute was January 1, 1966. See Pub.L. No. 89-92, Sec. 11, 79 Stat. at 284.

The district court held that the statute did not have preemptive effect, but certified the preemption question for interlocutory review by this court pursuant to 28 U.S.C. Sec. 1292(b) (1982). We assumed jurisdiction over the appeal and concluded that the Act impliedly preempted some of the plaintiff's claims, holding as follows:

[T]he Act preempts those state law damage actions relating to smoking and health 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.... [W]here the success of a state law damage claim necessarily depends on the assertion that a party bore the duty to provide a warning to consumers in addition to the warning Congress has required on cigarette packages, such claims are preempted as conflicting with the Act.

789 F.2d at 187 (footnote omitted). We remanded the case to the district court so that it might determine which claims were preempted.

The district court interpreted our decision as preempting the plaintiff's failure to warn, express warranty, fraudulent misrepresentation, and conspiracy to defraud claims to the extent that they sought to challenge the defendants' advertising, promotional, and public relations activities after January 1, 1966. See 649 F.Supp. 664, 669, 673-75 (D.N.J.1986). Because Mrs. Cipollone did not smoke cigarettes manufactured by Philip Morris or Lorillard before January 1, 1966, the district court granted judgment on the pleadings on the failure to warn and express warranty claims as to those defendants. However, the district court held that the plaintiff's design defect and risk-utility claims were not preempted. See id. at 669-72.

In another pretrial ruling, the district court struck the plaintiff's generic risk-utility claim on the ground that it was barred through the retroactive application of the New Jersey Products Liability Act, 1987 N.J.Sess.Law Serv. ch. 197, 188-93 (West) (codified at N.J.S.A. Secs. 2A:58C-1 to -7 (West 1987)). See Dist.Ct.Op. 1-6 (Oct. 27, 1987).

After five years of discovery and numerous pretrial motions, the case proceeded to trial on plaintiff's failure to warn, design defect, express warranty, fraudulent misrepresentation, and conspiracy claims, and on defendants' comparative fault and statute of limitations defenses. On April 21, 1988, at the close of plaintiff's proofs, the district court struck the design defect claim on the ground that plaintiff had failed to present sufficient evidence that defendants' failure to market an alternatively designed cigarette when it became feasible to do so in the mid-1970s was a proximate cause of Mrs. Cipollone's illness and death. See 683 F.Supp. 1487, 1493-95 (D.N.J.1988). This ruling has not been challenged on appeal.

As a result of the district court's rulings, jury deliberations were limited to the fraudulent misrepresentation claim against each defendant, the conspiracy to defraud claim against each defendant, the failure to warn claim against Liggett, and the express warranty claim against Liggett. The district court also took the defendants' statute of limitations defense from the jury by granting partial summary judgment for the plaintiff on this issue. See Dist.Ct.Op. (Dec. 21, 1987).

After a four-month trial, the jury deliberated for four and one half days and returned its verdict in the form of answers to special interrogatories. See Fed.R.Civ.P. 49(a). The interrogatories and the jury's answers are as follows:

1. Has plaintiff proven all of the elements necessary to establish fraudulent misrepresentation or concealment by defendant Liggett, prior to 1966, of material facts concerning significant health risks associated with cigarette smoking?

Yes

No X

2. Has plaintiff proven all of the elements necessary to establish fraudulent misrepresentation by defendant Philip Morris, prior to 1966, of material facts concerning significant health risks associated with cigarette smoking?

Yes

No X

3. Has plaintiff proven all of the elements necessary to establish fraudulent misrepresentation by defendant Lorillard, prior to 1966, of material facts concerning significant health risks associated with cigarette smoking?

Yes

No X

4. Was there a conspiracy prior to 1966 to fraudulently misrepresent and/or conceal material facts concerning significant health risks associated with cigarette smoking?

Yes

No X

5. If you answered "yes" to question # 4, were any of the defendants members of that conspiracy?

Liggett Group, Inc.         Yes ___  No ___
Philip Morris Incorporated  Yes ___  No ___
Lorillard, Inc.             Yes ___  No ___

6. If you answered "yes" to question number 5, has plaintiff proven all of the elements necessary to establish fraudulent misrepresentation or concealment, prior to 1966, by any member of the conspiracy?

Yes

No7. Should Liggett, prior to 1966, have warned consumers regarding health risks of smoking?

Yes X

No

8. If you answered "yes" to question 7, was that failure to warn prior to 1966 a proximate cause of all or some of Mrs. Cipollone's smoking?

Yes X

No

9. If you answered "yes" to question 8, was such smoking a proximate cause of Mrs. Cipollone's lung cancer and death?

Yes X

No

10. If you answered "yes" to question 9, did Mrs. Cipollone voluntarily and unreasonably encounter a known danger by smoking cigarettes?

Yes X

No

11. If you answered "yes" to question 10, was this conduct by Mrs. Cipollone a proximate cause of her lung cancer and death?

Yes X

No

12. If you answered "yes" to question 11, what is the percentage of responsibility for Mrs. Cipollone's injuries attributable to each of the following parties:

Mrs. Cipollone 80%

Liggett Group, Inc. 20%

[NOTE: The sum of these percentages must equal 100%].

13. Did Liggett make express warranties to consumers regarding the health aspects of its cigarettes?

Yes X

No

14. If you answered "yes" to question 13, did any Liggett products used by Mrs. Cipollone breach that warranty?

Yes X

No

15. If you answered "yes" to question 14, was Mrs. Cipollone's use of these products a proximate cause of her lung cancer and death?

Yes X

No

16. If you answered "yes" to any of the following questions: 1, 2, 3, 6, 9 or 15, what damages did Mrs. Cipollone sustain?

$none

17. If you answered "yes" to any of the following questions: 1, 2, 3, 6, 9, or 15, what damages did Mr. Cipollone sustain?

$400,000

18. If you answered "yes" to any of the following questions: 1, 2, 3, 6 or 9, is plaintiff entitled to punitive damages against one or more of the defendants?

Yes

No X

19. If you answered "yes" to question 18, to what amount is plaintiff entitled?

$

20. If you awarded a sum under question 19, what amount of this total is attributable to each of the following parties?

Liggett Group, Inc. $_____

Philip Morris Incorporated $_____

Lorillard, Inc. $_____

[NOTE: these amounts should add up to the total awarded under question 19.]

As the answers to the interrogatories indicate, the jury rejected the fraudulent misrepresentation claims and the conspiracy to defraud claims against all defendants. As to the failure to warn claim against Liggett, the jury concluded that Liggett breached its duty to warn of the health hazards of smoking before 1966, that this breach was a proximate cause of Mrs. Cipollone's smoking, and that Mrs. Cipollone's smoking was a proximate cause of her death. No damages were awarded on the failure to warn claim, however, because New Jersey's comparative fault law bars a plaintiff from recovering damages if she is more than 50% at fault for the injury, and the jury found that Mrs. Cipollone "voluntarily and unreasonably encounter[ed] a known danger by smoking cigarettes" and in so doing bore 80% of the responsibility for her injuries. As to the express warranty claim, the jury found that Liggett had breached an express warranty made to consumers. The jury awarded Mr. Cipollone $400,000 to compensate him for damages that he sustained from Liggett's breach of warranty; the jury awarded Mrs. Cipollone's estate no damages on the breach of warranty claim.

On June 29, 1988, the plaintiff moved for a new trial on the limited issue of Mrs. Cipollone's damages and to amend the judgment to include prejudgment interest pursuant to New Jersey Court Rule 4:42-11(b). On July 1, 1988, Liggett moved for judgment n.o.v. and, in the alternative, for a new trial on account of alleged error in the district court's jury instructions on express warranty and in its special interrogatories. On August 24, 1988, the district court denied all of the post-trial motions. See 693 F.Supp. 208 (D.N.J.1988). The defendants and Mr. Cipollone filed timely notices of appeal.

In its appeal, Liggett contends that the district court made the following prejudicial errors in its jury instructions: (1) it failed to instruct the jury that Mrs. Cipollone's nonreliance on the Liggett advertisements would preclude her recovery on the express warranty claim; (2) it failed to the instruct the jury that a buyer's actual knowledge of a warranty-breaching condition bars recovery on an express warranty claim under the doctrine of assumption of risk or contributory fault; and (3) it erroneously instructed the jury in several respects on the failure to warn claim, most significantly by failing to impose a but-for causation requirement.

Liggett also contends that the district court erred in failing to grant its motion for judgment n.o.v. on the express warranty claim on the grounds that (1) the jury's finding that Mrs. Cipollone "voluntarily and unreasonably encounter[ed] a known danger by smoking cigarettes" established lack of proximate causation as a matter of law; (2) the plaintiff offered no evidence that Mrs. Cipollone's lung cancer was proximately caused by any claimed breach of express warranty; and (3) the evidence cannot support a finding that any Liggett advertisement made a warranty covering health effects in the future from forty years of smoking. Liggett also contends that the district court erred by granting plaintiff partial summary judgment on defendants' affirmative defenses based on the statute of limitations.

In his appeal, Mr. Cipollone contends that (1) the district court's jury charge and interrogatories on the failure to warn issue erroneously and unfairly allowed the jury to consider Mrs. Cipollone's post-1965 smoking in determining her percentage of comparative fault; (2) the district court erred in applying the New Jersey Products Liability Act to strike the risk-utility claim; (3) the district court's refusal to award prejudgment interest contravenes New Jersey Court Rule 4:42-11(b); and (4) the district court erred in applying our preemption decision to the intentional tort claims (i.e. the fraudulent misrepresentation and conspiracy to defraud claims). Mr. Cipollone also announced that if the verdict in his favor on the breach of express warranty claim and his contention that he is entitled to prejudgment interest were upheld, he would not press his other contentions.

In its protective cross-appeal, Philip Morris contends that Mr. Cipollone's intentional tort claims are preempted, and that, in any event, these claims are mooted by the jury's findings. In its protective cross-appeal, Lorillard asserts that, in view of Mr. Cipollone's concession that he would be satisfied to accept the breach of express warranty verdict plus prejudgment interest, our assumption of jurisdiction over Mr. Cipollone's appeal relative to the claims against it and Philip Morris would violate the "case or controversy" requirement of Article III of the United States Constitution.⁴ Lorillard also contends that the intentional tort claims are preempted by the Labeling Act.

IV. SHOULD MRS. CIPOLLONE'S POST-1965 CONDUCT HAVE BEEN

CONSIDERED IN DECIDING HER COMPARATIVE FAULT ON

THE FAILURE TO WARN CLAIM?5

The New Jersey Comparative Fault Act, N.J.S.A. 2A:15-5.1, states that:

Contributory negligence shall not bar recovery in an action by any person ... to recover damages for negligence resulting in death or injury to person or property, if such negligence was not greater than the negligence of the person against whom recovery is sought.... Any damages sustained shall be diminished by the percentage sustained of negligence attributable to the person recovering.

The Comparative Fault Act can apply to strict liability actions if the plaintiff's conduct can be found to constitute contributory negligence. See Suter v. San Angelo Foundry & Machine Co., 81 N.J. 150, 164, 406 A.2d 140, 147 (1979). Thus, if Mrs. Cipollone were more than 50% responsible for her own smoking, as the jury found her to be, plaintiff would be barred from recovering under his failure to warn claim. As we have noted, the interplay between New Jersey's comparative fault scheme and the preemptive effect of the Labeling Act produced an anomalous situation at trial. The district court did not distinguish between Mrs. Cipollone's pre-1966 and post-1965 conduct when instructing the jury to consider the degree to which she was at fault pursuant to New Jersey comparative fault law.⁶

The wording of special verdict interrogatories 10, 11, and 12 was to the same effect,⁷ permitting the jury to consider Mrs. Cipollone's fault to the extent it believed that she acted unreasonably in continuing to smoke after 1965. However, the court instructed the jury not to consider Liggett's post-1965 conduct. Mr. Cipollone contends that the jury instructions were inconsistent with Ostrowski v. Azzara, 111 N.J. 429, 545 A.2d 148 (1988), in which the New Jersey Supreme Court held that once a legal wrong has occurred, plaintiff's conduct after that time bears only on mitigation of damages (even if some of plaintiff's injuries have not yet manifested themselves). Such conduct does not, however, bear on whether plaintiff's comparative fault falls above or below the 50% threshold.

Mr. Cipollone also contends that the district court's jury instructions were asymmetrical and unfair because they permitted the jury to use Mrs. Cipollone's post-1965 conduct to bar her claim even though the post-1965 marketing practices of the defendant were free from scrutiny. He points out that the jury was required to bar Mrs. Cipollone's failure to warn claim in its entirety if it believed that she was 80% responsible for her injury in light of her smoking from 1942 to 1983 even if it believed that Liggett's failure to warn was, for example, 67% responsible for Mrs. Cipollone's smoking from 1942 to 1966.

Because the facts and reasoning of Ostrowski are so important to our resolution of the issue of Mrs. Cipollone's post-1965 conduct, we recount them in some detail. Mrs. Ostrowski was a patient whose diabetes, poor diet, and cigarette smoking caused her to have severe blood circulation problems. She went to her podiatrist to complain of soreness in her left toe. After several visits, and after considering her representation (which proved to be false) that she had seen her internist regarding her diet and insulin dosage, the podiatrist recommended that the toe nail on the sore toe be removed to allow drainage. After the surgery, the plaintiff continued to smoke, despite advice that she should stop (because smoking greatly increases the blood circulation problems caused by diabetes). Several weeks after the surgery, it became clear that the blood flow to the toe was insufficient to heal the toe; the plaintiff was left with a non-healing, pre-gangrenous wound. Mrs. Ostrowski had to undergo three different by-pass surgeries to increase blood circulation to the toe. The last operation involved a vein transplant from one leg to the other.

Mrs. Ostrowski sued the podiatrist, contending that the podiatrist was negligent in her initial decision to remove the toe nail, that the toe nail should not have been removed, and that her subsequent problems with her leg were proximately caused by the podiatrist's negligence. The podiatrist contended that the plaintiff was at fault in both her pre-surgery and post-surgery conduct and that this conduct contributed to her injuries. The jury found that the podiatrist had acted negligently in removing the plaintiff's toenail but found that plaintiff's fault, based on both her pre- and post-surgery conduct, exceeded that of the podiatrist (51% to 49%). The plaintiff's recovery was therefore barred by the trial court under New Jersey comparative fault law because her fault exceeded 50%.

The Appellate Division of the Superior Court affirmed, but the Supreme Court of New Jersey reversed. Because the podiatrist's negligence was in performing the toe surgery, the Court conceptualized the plaintiff's behavior after treatment had begun but before the toe surgery as relevant to comparative fault. However, the Court concluded that her post-surgery behavior was relevant only to avoidable consequences.⁸ On remand, the jury was instructed to arrive at two percentage figures regarding plaintiff's conduct: first, the degree to which her conduct after treatment had begun was responsible for the toe surgery, and second, the degree to which her conduct after treatment had begun--considering her conduct both before and after the toe surgery--was responsible for her ultimate injury, the bypass surgery. If the first percentage (the plaintiff's fault for the toe surgery) was less than the physician's fault for the toe surgery, the plaintiff would recover. Her recovery, however, would be offset by the second percentage times the damages suffered (which reflects plaintiff's total responsibility for her ultimate injury).⁹ If the first percentage was greater than the physician's fault for the surgery, plaintiff's recovery would be barred by the Comparative Fault Act.

The Court distinguished between the plaintiff's conduct before and after the toe surgery on the ground that "[a]voidable consequences ... come[ ] into action when the injured party's carelessness occurs after the defendant's legal wrong has been committed" but "[c]ontributory negligence ... comes into action when the injured party's carelessness occurs before defendant's wrong has been committed or concurrently with it." 111 N.J. at 438, 545 A.2d at 152.¹⁰ In explaining why it thought that the jury should arrive at two percentages to measure plaintiff's fault, the Court reasoned that "it would be the bitterest irony if the rule of comparative negligence, designed to ameliorate the harshness of contributory negligence, should serve to shut out any recovery to one who would otherwise have recovered under the law of contributory negligence [because her contributory conduct was relevant to avoidable consequences rather than contributory negligence]." Id. at 441-42, 545 A.2d at 154.

The Court held that the plaintiff's conduct before treatment had begun was irrelevant to both the comparative fault and avoidable consequence inquiries, under the doctrine that the " 'defendant "must take the plaintiff as he finds him." ' " Id. at 438, 545 A.2d at 152 (citation omitted). Nevertheless, the Court made clear that the plaintiff's conduct before treatment had begun was not totally irrelevant to the case: that conduct was relevant to determining what damages were a proximate result of the defendant's negligence, because, as we have noted, some of the damage to the plaintiff's leg could have been caused not by the defendant's negligence but by the plaintiff's pre-treatment condition. See id. at 448, 545 A.2d at 157.¹¹

We agree with Mr. Cipollone's contention that it is appropriate to conceptualize our preemption decision as imposing an automatic cut-off date for imposition of liability. We further agree with Mr. Cipollone that, in light of the preemption decision, the doctrines set out in Ostrowski should have been applied in this case. As Liggett emphasizes throughout its brief, its post-1965 marketing practices could not form the basis for any tort or warranty claim as a matter of law; hence, Liggett's arguably tortious conduct was completed as of January 1, 1966. Therefore, Mrs. Cipollone's post-1965 conduct should have been considered as relevant to avoidable consequences, possibly reducing her damages but not foreclosing liability.

We reject Liggett's contention that "application of plaintiff's interpretation of Ostrowski would require this court to hold that the case overruled the New Jersey Supreme Court's [product liability] decisions in Suter v. San Angelo Foundry & Machine Co., 81 N.J. 150, 406 A.2d 140 (1979); Maiorino v. Weco Products Co., 45 N.J. 570, 214 A.2d 18 (1965) and Cintrone v. Hertz Truck Leasing, 45 N.J. 434, 212 A.2d 769 (1965)." Liggett's Br. at 43 n. 50. Liggett's argument apparently is that the instant case is no different from the typical toxic tort case in which there may be a significant interval between the time of defendant's wrongful act (the sale of or exposure to the defective product) and the time plaintiff's injury from use of the product manifests itself. Therefore, according to Liggett, all of the plaintiff's pre-injury conduct should bear on comparative fault. Our preemption decision renders this analogy inapposite, however. In the more typical case, the jury considers all of the defendant's pre-injury conduct also. Because that cannot happen here, we find it unfair and impermissible for the jury to consider Mrs. Cipollone's comparative fault during the period (1966-1981) for which Liggett's conduct is unjudgable.

We have no way of knowing how much of the 80% fault that the jury ascribed to Mrs. Cipollone is attributable to her pre-1966 smoking and how much to her post-1965 smoking. The judgment entered on the jury verdict in Liggett's favor on the failure to warn claim must therefore be reversed (the error is obviously not harmless) and the case remanded for a new trial on that issue.

We do not dispute Liggett's contention that we could analyze the case differently. However, we believe that the artificial cut-off so skews the normal balance that only the Ostrowski avoidable consequences analysis can mitigate the unfairness and disruption to state tort law wrought by our preemption decision. We acknowledge that the retrial must proceed, to some extent, with an artificial distinction between conduct before and after January 1, 1966, and that the expert witnesses will face a difficult task on allocating the consequences of pre-1966 and post-1965 conduct. However, that result is forced upon us by the circumstances. This will not be the first time, nor the last, that a legal construct will have constrained a trial. We are confident that the extremely able lawyers and the distinguished trial judge in whose hands this case rests will do it justice.

On retrial, the jury should be asked whether Liggett's pre-1966 failure to warn caused Mrs. Cipollone to smoke cigarettes.¹² The jury must consider the relative degrees to which Mrs. Cipollone and Liggett were at fault for Mrs. Cipollone's pre-1966 smoking. If Mrs. Cipollone is thought to have been more than 50% at fault than Liggett for her pre-1966 smoking, then the failure to warn claim ends there, and Mrs. Cipollone's recovery is barred on that claim. If, however, the jury finds that Mrs. Cipollone's pre-1966 fault for her smoking is 50% or less (and that that smoking was a proximate cause of her cancer), the jury must then consider the issue of avoidable consequences, considering Mrs. Cipollone's conduct both before and after January 1, 1966. The jury may not evaluate the propriety of the defendants' cigarette marketing practices after 1965, because the defendants have been absolved from liability for otherwise tortious and unfair marketing practices by the Labeling Act.

V. DID THE DISTRICT COURT OTHERWISE ERR IN INSTRUCTING THE

JURY ON THE FAILURE TO WARN CLAIM?

Liggett contests several facets of the district court's jury charge on the failure to warn claim. Had the verdict on the failure to warn claim not been set aside on the grounds set forth in Part IV, we would have had to address these arguments in connection with Liggett's contention that the jury's answers to interrogatories 7, 8 and 9, in which it found that Liggett's failure to warn was a proximate cause of Mrs. Cipollone's injuries, should be set aside. We nonetheless discuss most of these issues because they are important for a proper retrial.

First, Liggett contends that it was under no duty to warn of the dangers of cigarettes because their dangers were commonly understood. We find that there is no basis for so holding as a matter of law, and that as a matter of fact the jury found otherwise.¹³

Liggett next argues that (1) the district court erred in instructing the jury on Liggett's duty to disclose the results of its scientific tests and (2) the district court's use of the word "obviousness" confused the jury. We find both of these contentions to be without merit. Under New Jersey law, Liggett had a duty to conduct research, and to disclose significant dangers discovered as a result of that research. See Feldman v. Lederle Laboratories, 97 N.J. 429, 453-55, 479 A.2d 374, 386-88 (1984). Moreover, there was nothing confusing about the district court's use of the word "obvious." The jury had no reason to think that it might be deciding an "open and obvious" danger case, see, e.g., Shaffer v. AMF, Inc., 842 F.2d 893 (6th Cir.1988), and therefore it could not have been prejudicially confused.¹⁴

Liggett's more substantial contention has to do with the district court's instruction on causation, which defines proximate cause¹⁵ as follows:

a cause which necessarily set the other causes in motion and was a substantial contributing factor in bringing about the injury. Proximate cause is defined as a cause which naturally and probably led to and might have been expected to produce the result complained of.

2 J.A. 91-92. The district court also instructed the jury that "there may be two or more concurrent and directly cooperative and efficient proximate causes of an injury" if the defendant was "a substantial contributing factor" in the plaintiff's injuries. 2 J.A. 93.

It is not exactly clear what fault Liggett finds with this instruction. Liggett claims that: "Plaintiff was required to prove that 'but for' Liggett's claimed failure to warn Mrs. Cipollone would not have been injured--that had Liggett provided a warning prior to 1966 Mrs. Cipollone would have quit smoking or never started smoking, and by doing so, Mrs. Cipollone would have avoided lung cancer in 1981." Liggett Br. at 50. There are three possible interpretations of Liggett's objection.

First, Liggett may be arguing that, even if plaintiff proves by a preponderance of the evidence that the totality of Liggett's violation of legal norms--its failure to warn and breach of warranty--was a "but for" cause of Mrs. Cipollone's lung cancer, the jury could not find for the plaintiff with respect to any individual Liggett violation unless the plaintiff demonstrated by a preponderance of the evidence that that individual violation caused Mrs. Cipollone's lung cancer. This bifurcation of Mr. Cipollone's lawsuit into two independent claims might allow Liggett to escape liability for the totality of its wrongful conduct. We find this argument untenable.

As a substantive matter, Liggett is liable if its behavior proximately caused Mrs. Cipollone's cancer. For pleading purposes, Mr. Cipollone divided Liggett's conduct up into different pre-established legal categories, i.e. a tort-based failure to warn claim and a contract-based express warranty claim. Although the elements of proof necessary to prove liability under these two legal theories differ, the procedural pleading and proof requirements do not transform Mr. Cipollone's allegations into two completely different lawsuits. Thus, Mr. Cipollone does not have to prove that each legal violation proximately caused his wife's cancer. He need only prove that the totality of Liggett's wrongful behavior, which as doctrinal matter is divided into a tort and contract claim, proximately caused her cancer.

Second, Liggett may be arguing that Mrs. Cipollone's conduct would have caused her cancer no matter what Liggett did, and that therefore Liggett's conduct cannot be considered the cause of Mrs. Cipollone's injury. This argument is plainly inconsistent with the established jurisprudence of concurrent causation. The "substantial factor" test has traditionally been used in concurrent cause cases, i.e. cases in which there are two or more causes each of which is sufficient to cause the injury.¹⁶ See Keeton et al., Prosser and Keeton on The Law of Torts 266-68 (5th ed. 1984). Our preemption decision makes this case quite comparable to a concurrent cause situation. Liggett's pre-1966 behavior might have been enough, by itself, to cause Mrs. Cipollone's cancer, and its post-1965 behavior might also have been enough to cause the cancer. Thus, just as it is unfair to let one tortfeasor completely escape liability for his fire merely because another tortfeasor caused another fire, so it is unfair to let Liggett completely escape liability for its pre-1966 behavior merely because its post-1965 behavior (or that of its codefendants), which was immunized from scrutiny at the trial, might also have caused enough damage, by itself, to kill her.

Third, Liggett may be arguing that Mr. Cipollone had to prove, to a greater degree of certainty than the district court's instruction required, that Liggett's failure to warn caused her injuries. Under this theory, the fact that defendant's conduct might have been a substantial factor in causing Mrs. Cipollone's cancer would not be enough; rather, Mr. Cipollone would have had to prove, by a preponderance of the evidence, that if Liggett had not breached its warranty and if it had warned consumers of the dangers of smoking, Mrs. Cipollone would not have contracted cancer. In other words, Liggett argues that plaintiff had to prove that "but for" Liggett's conduct, the injury would not have occurred.¹⁷ We find this argument to be inconsistent with New Jersey law.

Liggett cites Campos v. Firestone Tire and Rubber Co., 98 N.J. 198, 485 A.2d 305 (1984), which it claims rejected the substantial factor test and instead require a "but for" test in failure to warn situations. In Campos, the New Jersey Supreme Court found that the plaintiff had the burden of proving that a proper warning would have prevented the injury caused by a tire assembly explosion. The plaintiff was arguably aware of the need to protect himself by keeping the tire in a safety cage, but he reached into the cage and was injured when the assembly exploded. The court quoted with approval from an article by Dean Keeton:

If the basis for recovery under strict liability is inadequacy of warnings or instruction about dangers, then plaintiff would be required to show that an adequate warning or instruction would have prevented the harm.¹⁸

However, the court in Campos did not reverse the jury's verdict for the plaintiff. Instead, it remanded noting that "there may be some question whether plaintiff sustained his burden of proving causation, see Brown v. United States Stove Co., [98 N.J. 155, 484 A.2d 1234 (1984) ]." Campos, 98 N.J. at 211, 485 A.2d at 312. Brown seems to endorse a substantial factor test: "a tortfeasor will be held answerable if its 'negligent conduct was a substantial factor in bringing about the injuries.' " Brown, 98 N.J. at 171, 484 A.2d at 1243 (citations omitted). Thus, although the language quoted from Deen Keeton's article in Campos suggests that New Jersey might endorse a "but for" test in failure to warn cases, the citation to Brown indicates to the contrary. Subsequent New Jersey cases interpreting Campos also indicate to the contrary.

In Hull v. Getty Refining & Marketing Co., 202 N.J.Super. 461, 467, 495 A.2d 445, 448 (App.Div.1985), and Vallillo v. Muskin Corp., 212 N.J.Super. 155, 159-60, 514 A.2d 528, 530 (App.Div.1986), the New Jersey Superior Court cited Campos to support a substantial factor test. Determining proximate causation requires determining "whether [the] breach of a duty enforceable within strict product liability against any defendant constituted a substantial factor in the causation of plaintiff's accident." Hull, 202 N.J.Super. at 467, 495 A.2d at 448. Describing why it was overturning a plaintiff's verdict (not remanding, as the court did in Campos ), the Vallillo court reasoned that in Campos "[a] jury could have determined that the lack of a proper warning to rely on the cage's protection and to keep his arm out of the cage was at least a factor materially contributing to the happening of the accident." 212 N.J.Super. at 160, 514 A.2d at 530. In the case at bar, a jury could determine that Liggett's violations constituted a factor materially contributing to her injury.

New Jersey has also used the substantial factor test in nonfeasance situations. In Evers v. Dollinger, 95 N.J. 399, 471 A.2d 405 (1984), the New Jersey Supreme Court held that it was error to enter judgment for a doctor who failed to operate on a tumor for seven months. The court reasoned that, although the doctor's conduct did not cause the cancer, the seven-month delay could have been a substantial factor in causing the condition from which the plaintiff eventually suffered. In Hake v. Manchester Township, 98 N.J. 302, 486 A.2d 836 (1985), the same court held that plaintiff could establish causation in a wrongful death action by showing that defendant's negligent conduct negated a substantial possibility that plaintiff might have been saved after attempting to kill himself. Neither of these was a concurrent causation case and in neither case would defendant's conduct by itself have caused the injury. Yet, each defendant's conduct substantially increased the probability of the plaintiff's injury. In such situations the New Jersey courts have allowed recovery.

In light of these cases, we conclude that the district court did not erroneously instruct the jury as to the proximate cause requirement in Mr. Cipollone's failure to warn claim. The district court should again give a "substantial factor" charge on retrial.¹⁹

VI. DID THE DISTRICT COURT ERR IN FAILING TO INSTRUCT THE

JURY THAT MRS. CIPOLLONE'S NONRELIANCE ON

LIGGETT'S SAFETY ADVERTISEMENTS WOULD

PREVENT HER FROM RECOVERING ON

HER EXPRESS WARRANTY CLAIM?

We turn now to another major area of dispute between the parties, one that implicates the conceptual basis of express warranty law. Mr. Cipollone brought his express warranty claim under U.C.C. Sec. 2-313(1), which provides:

(1) Express warranties by the seller are created as follows:

(a) Any affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise.

(b) Any description of the goods which is made part of the basis of the bargain creates an express warranty that the goods shall conform to the description.

N.J.S.A. Sec. 12A:2-313(1) (emphases added). With respect to this issue, the district court gave the following instructions to the jury:

[P]laintiff must prove ... that Liggett, prior to 1966, made one or more of the statements claimed by the plaintiff and that such statements were affirmations of fact or promises by Liggett ... [and] that such statements were part of the basis of the bargain between Liggett and consumers like Rose Cipollone....

The law does not require plaintiff to show that Rose Cipollone specifically relied on Liggett's warranties.

Ordinarily a guarantee or promise in an advertisement or other description of the goods becomes part of the basis of the bargain if it would naturally induce the purchase of the product and no particular reliance by the buyer on such statement needs to be shown. However, if the evidence establishes that the claimed statement cannot fairly be viewed as entering into the bargain, that is, that the statement would not naturally induce the purchase of a product, then no express warranty has been created.

4 J.A. at 232-34.

Liggett contends that this interpretation of "part of the basis of the bargain" is flawed because the jury should also have been instructed that Mrs. Cipollone's nonreliance on the advertisements would preclude those advertisements from becoming "part of the basis of the bargain." Liggett argues that the express warranty verdict must therefore be set aside. Although our interpretation of the precise meaning of "reliance" differs somewhat from Liggett's, we agree.²⁰

Authority on the question whether reliance is a necessary element of section 2-313 is divided. Although a few courts have held that reliance is not a necessary element of section 2-313,²¹ the more common view has been that it is, and that either a buyer must prove reliance in order to recover on an express warranty or the seller must be permitted to rebut a presumption of reliance in order to preclude recovery.²² Some treatise writers support this interpretation.²³ No New Jersey court or panel of this court has squarely addressed the question.²⁴

The history of section 2-313(1)(a), although informative, fails to give a clear answer as to whether reliance is required. Section 2-313(1)(a) is an adaptation of section 12 of the Uniform Sales Act.²⁵ A comparison of the two sections reveals that they are substantially the same except for the replacement of section 12's express reliance requirement with section 2-313(1)(a)'s basis of the bargain requirement. The district court reasoned that the omission of the word "reliance" from section 2-313(1)(a), in light of section 12's use of that word, implied that reliance was no longer an element of express warranties. See 693 F.Supp. at 213. Liggett contends that "if U.C.C. Sec. 2-313 wrought the radical change in New Jersey warranty law that the trial court has read into it," then "[o]ne would think that the New Jersey Study Comments would have at least made reference to it." Liggett Br. at 19. We note in this regard that the New Jersey Study Comment One to section 12A:2-313 states that "[t]his section of the Code is comparable to section 12 of the Sales Act (N.J.S.A. 46:30-18), except that it characterized the warranties of sample and description as express warranties." There is no reference to the reliance issue.

Liggett argues that reliance must have some place in the "basis of the bargain" determination. Thus, even if reliance should be assumed, based on what "would reasonably induce the purchase of a product," a defendant must have an opportunity to prove nonreliance. This position finds some support in the U.C.C. comments. U.C.C. Official Comment 3 states:

In actual practice affirmations of fact made by the seller about the goods during a bargain are regarded as part of the description of those goods; hence no particular reliance on such statements need be shown in order to weave them into the fabric of the agreement. Rather, any fact which is to take such affirmations, once made, out of the agreement requires clear affirmative proof. The issue normally is one of fact. (Emphasis added.)

Moreover, comment 8 states that "all of the statements of the seller [become part of the basis of the bargain] unless good reason is shown to the contrary." (Emphasis added.) The plain language of these comments supports Liggett's position, at least to the extent it indicates that a defendant must be given some opportunity to show that the seller's statements were not meant to be part of the basis of the bargain.

This court has interpreted comment 3 before, in another tobacco case, Pritchard v. Liggett & Myers Tobacco Co., 350 F.2d 479 (3d Cir.1965) (applying Pennsylvania law). In a footnote to a concurring opinion, Judge Freedman stated the following:

The comment by the drafters of the [U.C.C.] make it clear that what was formerly described as reliance [under Sec. 12 of the Uniform Sales Act] is now absorbed as a factor which is made a basis of the bargain. Comment 3 to Sec. 2-313 states that where a statement is made during a bargain no particular evidence of reliance need be shown, but that it remains a question of fact whether evidence introduced by the defendant is sufficient to show non-reliance.

350 F.2d at 491 n. 7 (Freedman, J., concurring).²⁶ Pritchard therefore reads the last sentence in comment 3 ("[A]ny fact which is to take such affirmations, once made, out of the agreement requires clear affirmative proof.") as qualifying the sentence that precedes it ("[N]o particular reliance need be shown."). In other words, even though "no particular reliance need be shown," the seller can "take [an] affirmation ... out of the agreement" by showing that the buyer did not rely.

This interpretation of comment 3 appears consistent with that of the New Jersey Supreme Court. In Gladden v. Cadillac Motor Car Division, 83 N.J. 320, 416 A.2d 394 (1980), the Court held that a manufacturer's attempted limitation of its damages for breach of its express warranty could be given no effect in light of the "linguistic maze" of the warranty. See id. at 333, 416 A.2d at 401. The Court cited Comment 3, stating that "[p]articular reliance on such statements of description or quality need not be shown." Id. at 325, 416 A.2d at 396. The Court thus expressly rejected the view that the plaintiff has the burden of proving reliance on the seller's affirmation of fact, promise or description. Nonetheless, the statement that "particular reliance need not be shown," made in the context of a discussion about Comment 3, does not imply that a defendant cannot defeat a warranty claim by showing that the affirmation of fact, promise or description was not part of the basis of the bargain. We believe that Gladden states not that reliance is irrelevant, but only that the plaintiff need not prove reliance.

A final argument in support of a reliance requirement is found in the amicus brief. Without a reliance requirement, one runs the risk of draining the term "basis of the bargain" of all meaning, because the buyer's subjective state of mind becomes completely irrelevant. The district court instructed the jury that a statement could be considered part of the basis of the bargain if it "would naturally induce the purchase of the products." This instruction is completely objective and would permit a buyer to sue for breach of express warranty even if the seller's warranties were advertisements made in another state or country, and even if the buyer did not hear of the claims in these advertisements until the day that she walked into an attorney's office to bring suit for personal injury. It strains the language to say that a statement is part of the "basis" of the buyer's "bargain," when that buyer had no knowledge of the statement's existence.

The above arguments notwithstanding, it is possible to read the "basis of the bargain" requirement as requiring some subjective inducement of the buyer, without requiring a reliance finding. Requiring that the buyer rely on an advertisement, whether by imposing this burden initially on the buyer bringing suit, or by allowing the seller to rebut a presumption of reliance, puts a heavy burden on the buyer--a burden that is arguably inconsistent with the U.C.C. as a whole, with other comments to section 2-313 in particular, and with several commentators' suggestions in this area.²⁷

The reliance requirement does not comport well with U.C.C. Official Comment 7 to section 2-313. Comment 7 states that "[i]f language is used after the closing of the deal ... the warranty becomes a modification, and need not be supported by consideration if it is otherwise reasonable and in order...." N.J.S.A. Sec. 12A:2-313 U.C.C. Comment 7. If a post-closing promise--on which, by definition, a seller cannot rely in deciding to make a purchase--can create a warranty, then it is difficult to see why a pre-closing promise can create a warranty only if relied upon.

Additionally, a reliance requirement seems inconsistent with U.C.C. Official Comment 4 to section 2-313. Comment 4 states that "the whole purpose of the law of warranty is to determine what it is that the seller has in essence agreed to sell." N.J.S.A. Sec. 12A:2-313 U.C.C. Comment 4. Reliance is irrelevant to what a seller agrees to sell.²⁸

In light of these seemingly inconsistent mandates on the reliance question, some might argue that it is foolish to try to reconcile what is patently inconsistent. We reject this suggestion however, because we find it feasible to reconcile the competing arguments, and we believe that the New Jersey Supreme Court would want us to try. We believe that the most reasonable construction of section 2-313 is neither Liggett's reliance theory, which fails to explain how reliance can be relevant to "what a seller agreed to sell," or the district court's purely objective theory, which fails to explain how an advertisement that a buyer never even saw becomes part of the "basis of the bargain." Instead, we believe that the New Jersey Supreme Court would hold that a plaintiff effectuates the "basis of the bargain" requirement of section 2-313 by proving that she read, heard, saw or knew of the advertisement containing the affirmation of fact or promise.²⁹ Such proof will suffice "to weave" the affirmation of fact or promise "into the fabric of the agreement," U.C.C. Comment 3, and thus make it part of the basis of the bargain.³⁰ We hold that once the buyer has become aware of the affirmation of fact or promise, the statements are presumed to be part of the "basis of the bargain" unless the defendant, by "clear affirmative proof," shows that the buyer knew that the affirmation of fact or promise was untrue. We believe that by allowing a defendant to come forward with proof that the plaintiff did not believe in the warranty,³¹ we are reconciling, as the New Jersey Supreme Court would want us to, the U.C.C. comments, the U.C.C. case law, and traditional contract principles, which serve as the background rules to the U.C.C.³²

As indicated above, Comment 4 and Comment 7, as well as the largely dominant objective theory of contracts, militate in favor of an interpretation of express warranty that ignores the buyer's subjective state of mind. Under the extreme version of this theory apparently adopted by the district court, all the buyer should have to show is what the seller agreed to sell. In other words, an express warranty would be created when a seller makes statements to the public at large that would induce a reasonable buyer to purchase the product, even if the actual buyer never heard those statements.³³ We find this result untenable, however. First, as mentioned above, this interpretation drains all substantive meaning from the phrase "basis of the bargain," and would allow a seller to collect even if that seller was unaware of the warranty until she walked into her attorney's office to file suit. Second, this interpretation is difficult, if not impossible, to square with other comments to the U.C.C. As discussed above, Comment 3 states that "no particular reliance on such statements need be shown .... Rather, any fact which is to take such affirmations, once made, out of the agreement requires clear affirmative proof." Comment 8 states that "all of the statements of the seller [become part of the basis of the bargain] unless good reason is shown to the contrary." Clearly, both Comment 3 and Comment 8 envision some mechanism for overcoming the presumption that the seller's statements, even if heard by the actual buyer, are a basis of the bargain.

Much of the case law supports this "belief" principle. A statement in the bill of sale that the goods are new does not constitute an express warranty when both the buyer and the seller knew that the statement was false. See Coffee v. Ulysses Irrigation Pipe Co., 501 F.Supp. 239 (N.D.Tex.1980). When a buyer has operated trucks before and knows that they need repairs, he cannot sue in express warranty on the seller's statement that the trucks were in good condition. See Janssen v. Hook, 1 Ill.App.3d 318, 272 N.E.2d 385 (1971). "The same representation that could have constituted an express warranty early in the series of transactions, might not have qualified as an express warranty in a later transaction if the buyer had acquired independent knowledge as to the fact asserted." Royal Business Machines v. Lorraine Corp., 633 F.2d 34, 44 (7th Cir.1980). See also Overstreet v. Norden Laboratories, Inc., 669 F.2d 1286, 1291 (6th Cir.1982) ("[A] statement known to be incorrect cannot be an inducement to enter a bargain."); Wendt v. Beardmore Suburban Chevrolet, Inc., 219 Neb. 775, 782, 366 N.W.2d 424, 429 (1985) (Car dealer's statements were not a basis of the bargain when plaintiff suspected that the car had been in an accident and had his mechanic inspect it.).

Although these cases reject, to a certain extent, one traditional contract principle, that terms should be construed objectively, they embrace another traditional contract principle, that of looking at the intention of the parties in light of the surrounding circumstances. See 3 R. Anderson, Uniform Commercial Code Sec. 2-313:36, at 29 (1983 & Supp.1987). The relevant intent is that the statement be part of the basis of the bargain, and that, "as in the case of any contract term, is a question of the intent of the parties." Id. at 30.³⁴

Applying our interpretation of section 2-313 to the case at bar, we conclude that the district court's jury instructions were erroneous for two reasons. First, they did not require the plaintiff to prove that Mrs. Cipollone had read, seen, or heard the advertisements at issue. Second, they did not permit the defendant to prove that although Mrs. Cipollone had read, seen, or heard the advertisements, she did not believe the safety assurances contained therein. We must therefore reverse and remand for a new trial on this issue.

There is ample evidence from which a jury could conclude that Mrs. Cipollone saw, read, or heard the advertisements. She frequently listened to the Arthur Godfrey show, and frequently read magazines that contained the advertisements. Thus, the awareness question is not problematic. However, there is also evidence that family members brought the hazards of smoking to her attention. Thus Liggett might be able to prove that she did not believe the advertisements that she saw.

Liggett contends that in light of the jury's answers to special verdict questions 10 and 12, which addressed Mrs. Cipollone's cigarette use notwithstanding knowledge of the hazard, a new trial is inappropriate because it is entitled to a verdict in its favor on the express warranty claim as a matter of law.³⁵ We disagree. First, as explained above in part IV, the district court's jury instructions with respect to questions 10 and 12 did not limit the inquiry into Mrs. Cipollone's conduct to the pre-1966 period. Because the only potential warranties at issue in this case are Liggett's pre-1966 advertisements, in order to find no warranties the jury must find that Mrs. Cipollone disbelieved Liggett's pre-1966 advertisements, and it did not have an opportunity to do so.

Questions 10 and 12 also do not ask specifically whether Mrs. Cipollone knew that the advertisements were false. The jury's answers indicate that Mrs. Cipollone should have known that cigarettes were harmful, despite Liggett's failure to warn. That does not mean that she actually knew that cigarettes were harmful, when Liggett was advertising to the contrary. The jury must be asked whether she disbelieved the advertisements. This is an inquiry distinct from (1) whether she should have disbelieved the advertisements,³⁶ and (2) whether it would have been unreasonable to smoke had Liggett not been advertising that smoking was safe. Consequently, Liggett is not entitled to rely on the jury's answers to these questions to preclude a new trial on the question whether its advertisements constituted express warranties.

VII. DID THE DISTRICT COURT ERR IN FAILING TO INSTRUCT THE

JURY THAT COMPARATIVE FAULT PRINCIPLES APPLY TO AN

EXPRESS WARRANTY CLAIM?

Liggett contends that New Jersey law permits a manufacturer to assert a comparative fault defense to an express warranty products liability suit and that the district court consequently erred in failing to so instruct the jury. We agree that comparative fault principles may be applicable in some express warranty cases, but we do not believe that they are applicable here.