Damages Ruling Eases Big Tobacco's Liability
The threat of a crippling, multibillion-dollar verdict against the tobacco industry vanished yesterday when a Florida appeals court ruled that damages in a path-breaking lawsuit may not be awarded in a single lump sum.
The decision is a victory for cigarette makers in a class action lawsuit that had, until yesterday, been considered a potentially lethal danger. Analysts had predicted that some of the smaller players in the industry might have been forced to file for bankruptcy had they been been slapped with a gigantic, one-time verdict.
The ruling stems from a lawsuit seeking damages on behalf of 500,000 injured smokers in Florida, the first successful suit of its kind. In June, a Miami jury decided that the tobacco makers had "engaged in extreme and outrageous conduct," a verdict that raised the possibility the companies would be hit with a record-setting damage award.
But in a two-paragraph ruling yesterday, a panel of appeals judges in Florida's Third District stated that damages must be considered one smoker at a time. Tobacco makers could still end up spending billions of dollars on the litigation, but the expense will trickle in rather than arriving with a calamitous thud.
The difference is vast, experts said. Some of the small players in the industry, already shaken by a $206 billion settlement with attorneys general last year, might have folded, unable to find an insurer willing to put up the money for an appeals bond. And the decision makes it less likely that attorneys in other states will file their own class action suits.