Tobacco verdict overturned in Fla.

Court calls $145 billion damages too much

July 07, 2006|By JON BURSTEIN | JON BURSTEIN,SOUTH FLORIDA SUN-SENTINEL

FORT LAUDERDALE, Fla. -- The Florida Supreme Court tossed out a $145 billion verdict against the country's five largest tobacco companies yesterday, finding the amount awarded by a Miami jury to smokers was excessive.

Believed to be the largest punitive-damage award in American legal history, the July 2000 verdict in the statewide class-action lawsuit sent shock waves through the tobacco industry and was hailed as a landmark by opponents of smoking. Three years later, the 3rd District Court of Appeal in Miami rejected the verdict in a harshly worded decision, gutting the jury's findings and condemning the court proceedings as "fundamentally unfair."

While the state high court's 79-page decision set aside the verdict, it did affirm the jury's conclusions that the tobacco companies misrepresented the addictive nature and health dangers of cigarettes.

Ailing smokers in Florida who would have qualified for a cut of the money now can use those findings as ammunition in individual lawsuits against the tobacco companies.

Plaintiffs' attorneys in South Florida said yesterday they anticipate an avalanche of such cases being filed within the next year. During the class-action case, it was estimated that between 300,000 and 700,000 Florida smokers could be covered.

"This decision breathes new life into these cases," said attorney Stanley Rosenblatt, part of the husband-and-wife legal team who filed the May 1994 lawsuit against Philip Morris Inc., R.J. Reynolds Tobacco, Brown & Williamson, Lorillard Tobacco and Liggett Group Inc. The Miami-Dade Circuit Court trial lasted two years with 157 witnesses called. Jurors spent just five hours deliberating on punitive damages before returning with a verdict that left people on both sides of the courtroom gasping.

Tobacco companies cheered the Florida Supreme Court's decision to set aside the verdict, seeing stock prices jump at the news. They had argued the verdict would bankrupt them.

Shares of Altria Group, parent of the country's largest cigarette maker, Philip Morris USA, rose 6 percent to $77.76 on the New York Stock Exchange. Shares of Reynolds American Inc., owner of R.J. Reynolds Tobacco and Brown & Williamson, rose 4.6 percent to $118.95.

"We're certainly pleased that the court unanimously found that the $145 billion punitive-damages award in the case violated due process and was excessive as a matter of law," said David Howard, a spokesman for R.J. Reynolds.

William Ohlemeyer, Philip Morris USA vice president and associate general counsel, said the ruling was in line with dozens of other decisions in state and federal courts finding that smokers' cases must be heard individually and not as a class. The company is reviewing whether it will ask the U.S. Supreme Court to consider issues in the case, he said.

Rosenblatt said that even with yesterday's decision, three of the companies - Philip Morris, Lorillard and Liggett - agreed in 2001 to pay sick smokers millions to avoid risking having to post a huge bond as they appealed the jury verdict. Under a court-approved agreement, the companies will pay $710 million, with the money split among sick smokers and some of it set aside for attorneys' fees.

Jon Burstein writes for the South Florida Sun-Sentinel.

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