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Price v. Philip Morris12/15/2005
ould recall the reason they initially chose to smoke a light or lower tar and nicotine cigarette. About 23% of those remaining could not. In addition to answering a series of questions about their beliefs regarding the relative safety of lower tar cigarettes compared to full-flavor cigarettes, the remaining respondents were asked to assume that Marlboro Lights were more hazardous than full-flavor cigarettes and to imagine the existence of a Marlboro Light that was identical in all other respects to the current product, except that it was truly safer to smoke. The respondents were then asked to state how much of a discount would be required to cause them to purchase the more hazardous product if the safer version were actually available.
Based on the answers to this question, Dr. Harris calculated that class members, on average, would demand a 92.3% discount from the market price if they were to continue to purchase Marlboro Lights. Applying this discount to all purchases of Marlboro and Cambridge Lights during the relevant class periods, and calculating prejudgment interest at 5%, noncompounded, Harris concluded that the 1.14 million members of the class had suffered $7.1005 billion in economic damages.
On cross-examination, Dr. Harris agreed that he had provided input into language used in the survey questions used by Knowledge Networks. He agreed that he was not an expert in survey design and did not consult such an expert before formulating the questions. He was unaware of any texts or guides for the formulation of contingent valuation surveys, although he was aware that such surveys are controversial. When asked if his diminution-in-value analysis "assumes both the reliability and the validity of the Knowledge Networks survey," he answered "yes," but offered no basis for his assumption.
PMUSA's expert, W. Kip Viscusi, Ph.D., is a professor of economics who holds four degrees from Harvard University. He has taught at Northwestern University and the University of Chicago and is presently on the faculty at Harvard University, where he holds an endowed chair and heads the program on Empirical Legal Studies. Dr. Viscusi described his particular expertise in the area of survey design and analysis. He has been analyzing survey data since 1976 and designing surveys since 1981 and has been published in numerous peer-reviewed books and journals. His specialty is the subject of risk and uncertainty.
Dr. Viscusi testified that the price of Marlboro Lights and Cambridge Lights has always been identical to the price of their full-flavored counterparts and, therefore, because the plaintiffs did not pay a premium for the claimed "lightness" of these products, they could not have suffered any economic loss. With regard to Dr. Harris' reliance on the Knowledge Networks survey offered by plaintiffs as evidence of economic damages, Dr. Viscusi explained that a contingent valuation survey attempts to determine the value in the marketplace of a hypothetical product. He offered three guidelines that he described as "good, sound practice" for such surveys. First, the survey should be pretested to ensure that the people taking the survey understand the questions. Second, the hypothetical "good" that is being described must be made fully understandable to the survey respondents, so that they will be able to "value the good." Third, because the "good" is a hypothetical product, "not a real market transaction," it is necessary for the survey to contain "internal consistency checks." When real market data is not available to compare to the survey answers and the survey itself does not ensure consistency, it may not be possible to determine whether the survey respondents took the questions serious
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