Coates v. R.J. Reynolds Tobacco Company

Supreme Court of Florida

Coates v. R.J. Reynolds Tobacco Company
Supreme Court of the United States
6/15/23, Justice Grosshans

Topics: Attorneys Fees; Offer of Judgment

The Supreme Court of Florida has unequivocally held that section 768.79, Fla. Stat. (2022), the offer-of-judgment statute, is not a prevailing-party statute.

Coates sued R.J. Reynolds for wrongful death of her sister, a former smoker. Before trial, Coates served RJR with two Proposals for Settlement (“PFSs”). The first was for $75,000, and the second was for $749,000. RJR did not accept either.

At trial, a jury awarded $300,000 in compensatory damages and $16,000,000 in punitive damages. The trial court reduced the compensatory damages based on a 50/50 comparative fault (so, $150,000). The trial court kept the punitive damages.

In the first appeal, the 5th DCA reversed the punitive damages as excessive. Reviewing the certified question of great public importance, the January 5, 2023 opinion, by the Supreme Court of Florida, clarified how punitive damages are handled, applying a strong presumption that punitives in excess of a 3:1 ratio are excessive.

Coates had a motion for attorney’s fees pending at the Supreme Court of Florida. RJR prevailed in the appeal. The punitives were slashed from $16,000,000 to $460,000. But the question was whether Coates had to prevail in the appeal or just prevail in the case as a whole in terms of the PFS.

If a plaintiff files a demand for judgment which is not accepted by the defendant within 30 days and the plaintiff recovers a judgment in an amount at least 25 percent greater than the offer, she or he shall be entitled to recover reasonable costs and attorney’s fees incurred from the date of the filing of the demand. These awards are called “penalties” under the statute. And the statute expressly allows defendants to collect attorney’s fees from plaintiffs who prevail if those plaintiff’s do not beat a defendant’s settlement offer by 75%. Thus, the statute is not a prevailing-party statute at all. In other words, even though Coates lost the appeal, she could win fees and costs for the appeal if she satisfies the PFS for the whole case.

The Court rejected RJR’s argument that the ruling encourages frivolous appeals. The court did caution that the statute only allows “reasonable” fees, and that the trial judge is supposed to consider a “nonexhaustive list of factors including the merit of the clam, the closeness of questions of fact and law, and the amount of additional delay if litigation is prolonged.” The Court stated that nothing in the opinion prevents a party from challenging the “reasonableness of fees by raising all relevant factors—including the frivolous nature of the appeal. However, we decline to hold that the outcome of an appeal is entirely dispositive as to the reasonableness of the appellate fees incurred.”

In light of the fact that Coates obtained a judgment that had been affirmed in part, the court provisionally granted her motion for reasonable appellate attorney’s fees. The amount is conditioned on the trial court finding, at the end of the case, that Coates is entitled to fees under a valid PFS.

Terry P. Roberts
Director of Appellate Practice Fischer Redavid PLLC
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