Fla. Court - Cigarette Firms To Face Punitive Damages
A state appeals court in Florida Wednesday refused to shelter U.S. tobacco companies from punitive damages in a follow-up trial to last July's sweeping liability verdict for as many as 1 million sick smokers.
The ruling knocked down arguments by Philip Morris Cos. Inc. and other defendants in the Engle vs RJ Reynolds class-action that potentially hundreds of billions of dollars in punitive damages be fixed through thousands of individual trials. It also sets the stage for a possibly massive award against beleaguered U.S. tobacco companies by year's end, analysts have said.
The follow-up trial, now scheduled for November 1, had been delayed by appeals by tobacco industry lawyers. They argued that the trial judge was improperly allowing punitive damages, usually the biggest portion of cash payments awarded by U.S. juries, to be set for all Florida's sick smokers at once.
Analysts have said the prospect of individual trials taking decades was a much milder threat to the financial health of cigarette makers than the possibility of a single massive judgement.
The three judges of Florida's Third District Court of Appeal ruled after an hour-long hearing in which Judge David Levy said the court had no intention of "micromanaging" the pioneering class-action suit. Cigarette makers may appeal on other issues later, the judges said in a brief written ruling.
Tobacco companies stocks fell after the ruling. Philip Morris, maker of top-selling Marlboro cigarettes, was off 2-1/4 to 28-11/16, after touching a 52-week low of 28-9/16. RJR Tobacco Holdings Inc., maker of Camel cigarettes and the No. 2 U.S. tobacco company after Philip Morris, also touched a new 12-month low of 23-1/2 before recovering slightly to 23-3/4, off 2-3/16.