Judge Makes Rule on Tobacco Damages
06/08/00
MIAMI (AP) - The tobacco industry has won a key victory in a landmark trial, with a judge ruling that jurors weighing potentially billions of dollars in punitive damages cannot consider ordering payments over time.
The ruling Wednesday by Circuit Judge Robert Kaye enables the industry to avoid the kind of structured payments it negotiated with states to settle smoking litigation in 1998. The industry has paid $14 billion so far under a 25-year commitment to pay $254 billion.
A month ago, the industry asked that any punitive damages be based on money it has now. Kaye waited to rule until the issue arose during testimony of University of Miami law school finance professor George Mundstock, one of two finance witnesses for smokers in the case.
Mundstock said the nation's five biggest cigarette makers are ``cash cows'' capable of raising $157 billion in six months by borrowing or selling themselves.
The lawsuit, filed on behalf of 300,000 to 700,000 sick Florida smokers, seeks a multibillion-dollar award from the industry as punishment for decades of misconduct. The jury already ruled the companies make a deadly product, and awarded $12.7 million in compensatory damages to three smokers representing the group.
The industry objected Wednesday when Mundstock was asked how much the companies could afford to pay over time. Lead tobacco attorney Dan Webb argued the intent was to boost the award.
With a payout over time, ``you can goose up the amount now and come up with an enhanced amount of punitive damages,'' Webb charged. He argued that Florida law restricts an award to a company's net worth.
The judge said the trend is to base such awards on the current ability to pay. ``That would be plowing new ground if we have a structured issue,'' he said.
After the trial adjourned for the day, Webb said he didn't want to interpret the judge's ruling.
Smokers' attorney Stanley Rosenblatt refused to comment.
The defendants are Philip Morris Inc., R.J. Reynolds Tobacco Co., Brown & Williamson Tobacco Corp., Lorillard Tobacco Co., Liggett Group Inc., the industry's defunct Council for Tobacco Research and the Tobacco Institute.
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