California Tobacco Class Action Certified, Billions in Claims
San Diego, May 10 (Bloomberg) -- A lawsuit seeking restitution from tobacco companies for every Californian who's bought cigarettes can proceed, a state judge ruled.
Superior Court Judge Ronald S. Prager in San Diego has certified class-action claims on behalf of California smokers who contend that Philip Morris Cos. and other cigarette makers broke the state's unfair business practices laws. Smokers may be eligible for billions of dollars in restitution if the suit -- one of the few of its kind nationally -- succeeds, plaintiffs' lawyers said.
While allowing the restitution claims to proceed, Prager refused to allow a class of smokers to seek punitive damages under state consumer-protection laws. Liability for addiction and smoking-related health-care costs, the grounds for many of the suits across the U.S. against tobacco companies, are not issues in the case.
``Say what you want about tobacco advertising. It's really image advertising. It's not the kind of advertising that most people would look at and say it is unfair or misleading on its face,'' said William Ohlemeyer, Philip Morris' general counsel, who added that his company will appeal.
The amount of potential damages may reach the billions of dollars, said plaintiffs' attorney Sharon Arkin of the Newport Beach, California, firm of Robinson, Calcagnie and Robinson.
Scope of Class
Prager is expected to rule in June on whether the class should include smokers back to 1992 or as far back as 1954, Arkin said.
It's not likely that the majority of smokers would come forward to receive reimbursement, or even have proof they deserve money back, Arkin said. If the plaintiffs prevail, she expects that the majority of damages would go into a smoking cessation program fund.
Also named in the suit are American Tobacco Company, now British American Tobacco Plc; R.J. Reynolds Tobacco Holdings Inc.; and Brown & Williamson Tobacco Corp., also a part of BAT.
A Florida class-action smokers' suit, the so-called Engle case, was the first to go to trial in 1999, but included claims for medical and compensatory damages. A Miami jury awarded $145 billion to plaintiffs.
The San Diego class action is an indication that the Florida case was not an aberration, as tobacco industry officials have insisted, said Northeastern University Tobacco Liability Project attorney Edward Sweda.
``This is an example of another court in another part of the country that has made a determination that a suit can go forward in a way that is much more manageable and cost effective for the entire court system,'' Sweda said.
It's been a big week in the legal affairs of tobacco companies. On Monday, Philip Morris, Lorillard Inc. and Liggett Group Inc. agreed to pay at least $709 million to the Engle plaintiffs, in exchange for not having to post a bond to cover the $145 billion award during appeals. Even if the three tobacco companies win their appeals, the plaintiffs will get to keep the $709 million.
Shares of New York-based Philip Morris rose 94 cents to $52.32. R.J. Reynolds shares fell 1 cent to $60.39, while BAT's American depositary receipts rose 13 cents to $16.20. Shares of Lorillard's parent, Loews Corp., fell 2 cents to $69.98, and Vector Group Ltd., parent of Liggett, fell 20 cents to $30.80.