Fla. Court Tosses $145B Tobacco Verdict
MIAMI - A Florida appellate court on Wednesday tossed out a record-setting $145 billion verdict for thousands of Florida smokers against the tobacco industry, saying the case should not have been tried as a class-action lawsuit.
The 67-page order by the 3rd District Court of Appeal decided smokers could not group themselves together in a single lawsuit against the nation's five biggest cigarette makers. The award was the largest punitive damage verdict in U.S. history.
Tobacco shares jumped on the news.
"Tobacco couldn't have wished for a more positive decision," said Martin Feldman, tobacco analyst at Merrill Lynch. The ruling confirms class-action suits against cigarette makers are "tough, perhaps impossible."
By eliminating class-action status for Floridians who claimed years of smoking made them ill, the court discarded the award issued in 2000 after a two-year trial.
The jury decided that cigarettes are deadly, addictive and defective because they make people sick when used as directed. It set punitive damages for an estimated 300,000 to 700,000 smokers after deciding compensatory damages for three people with cancer serving as representatives of the group.
The appeals court also agreed with the tobacco industry that the award would have violated state law by bankrupting them and called the trial plan unconstitutional.
"The fate of an entire industry, and of close to a million Florida residents, cannot rest upon such a fundamentally unfair proceeding," the three-judge appellate panel wrote. "Our system of justice requires more."
Tobacco representatives applauded the decision.
"This decision clearly shows we were right when we said it was inappropriate for this case to be pursued as a class action," said Mark Smith, a spokesman for Brown & Williamson Tobacco Corp., whose cigarette brands include Kool, Pall Mall and Lucky Strike.
"We feel that we've been completely vindicated in every respect," said Ronald Milstein, vice president and general counsel of Loews Corp.'s Lorillard Tobacco, maker of Kent and Newport cigarettes. He said the verdict "was fundamentally flawed from the very beginning" and "was a travesty of justice."
The other defendants were Altria Group's Philip Morris, R.J. Reynolds Tobacco and the Liggett Group.
In afternoon trading on the New York Stock Exchange (news - web sites), Altria Group's shares were up $3.45, or 9.9 percent, to $38.36, R.J. Reynolds shares gained $2.38, or 7.5 percent, to $34.09 and Loews shares rose $2.08, or 4.9 percent, to $44.46.
Attorneys Stanley and Susan Rosenblatt, who represented the smokers, were out of town and could not be reached for comment.
"Absent intervention by the Florida Supreme Court (news - web sites), this would appear to be a terrible blow to the class of sick smokers in Florida," said Mark Gottlieb, an attorney with the anti-smoking Tobacco Products Liability Project at Northeastern University law school.
He called the decision "very surprising" because the same court fashioned the class in 1996 and refused once before to reconsider its decision. In the meantime, many courts have denied class-action status for lawsuits filed by smokers.
Margaret Amodeo, whose husband Frank was awarded $5.8 million in compensatory damages by the same jury for his throat cancer, said they were "very disappointed. We were hoping that the ruling went the other way." She said her husband was too hoarse to talk, a recurring condition. The decision discarded the individual awards as well.
Matthew Myers, president of the Campaign for Tobacco-Free Kids, said the reversal "in no way absolves the tobacco industry of the decades of deception and wrongdoing that led a jury to assess the largest punitive damage award in history."
With more than 1,000 individual smoker lawsuits pending against cigarette makers, Mary Aronson, a tobacco policy and litigation analyst, said, "There may be plenty of risk still out there for the industry."
The major tobacco companies settled state lawsuits for smoking-related health care costs in 1998 for a total of $246 billion.
In October, a Los Angeles jury ruled that Philip Morris USA should pay $28 billion to a 45-year smoker with lung cancer. A judge later slashed the award to $28 million, saying it was "a reasonable sum."
The previous record for a verdict won by an individual against a tobacco company was $3 billion, awarded in June 2001 to smoker Richard Boeken. A California judge later reduced that verdict to $100 million.
Over time, public policy has been moving against Big Tobacco. The World Health Organization (news - web sites) is pushing governments to adopt sweeping anti-smoking restrictions, and several states have banned smoking in most indoor workplaces and restaurants.