Jury may sting Big Tobacco with massive punishment
MIAMI, July 9 (Reuters) - After more than two years at trial, a Miami jury, which has judged Big Tobacco liable for the sicknesses of hundreds of thousands of smokers, this week takes up what could potentially be multibillion-dollar damage awards.
Forecasts of the punitive damages in the pioneering Engle class-action case range from the hundreds of millions to hundreds of billions of dollars, a figure that would easily beat a record for U.S. punitive damages award set during 1999.
A California jury ordered carmaker General Motors to pay $4.8 billion to four children and two adults burned by the exploding gasoline tank of a Chevy Malibu that was rammed by a drunken driver. A judge later cut that award to $1.09 billion.
Much of Engle's immediate financial threat to blue-chip defendants such as Philip Morris (NYSE:MO - news), the maker of Marlboro cigarettes, Miller beer and Altoids mints, eased in May, when Florida capped at $100 million the bond defendants must post while appealing losing civil verdicts.
Florida's government worried that forcing the defendants to put up a massive bond while lawyers appealed the Engle verdicts could disrupt the $450 million cigarette makers pay to it each year under a legal settlement struck in the 1990s.
Plaintiffs' lawyers Susan and Stanley Rosenblatt, who three years ago secured a $349 million settlement from cigarette makers in a secondhand-smoke class action suit, will early next week put a price tag on the punishment they believe the defendants should receive.
The jurors can award less or more money or none at all. The trial judge can also reduce the punitive damages award but last week turned back a request to limit any award to $15.3 billion.
Court papers have said punitive damages covering as many as 500,000 or more sick smokers in Florida could go as high as $200 billion, and one defence lawyer has spoken of a judgment as high as $300 billion.
Some plaintiffs' witnesses testifying in recent weeks told the Miami jurors the companies could pay $150 billion, while an extraordinary parade to the Miami courtroom of chief executives from R.J. Reynolds Tobacco and other defendants depicted their companies as weighed down by other legal settlements in a shrinking sector.
The executives also said their companies had dramatically reformed and had dropped advertising that critics had claimed courted teenagers as part of late 1990s settlements with state governments requiring payments of $246 billion through 2021.
``Given the types of numbers mentioned by both sides, our hunch is that the jury may award far less than the gigadigit expectations of the media,'' Salomon Smith Barney analyst Martin Feldman said.
``Perhaps an award in the high single digit (or low double digit) billion dollar range is most likely,'' Feldman said in a report on Friday.
Whatever the dollar figure, the tobacco companies were sure to appeal and were likely to spend at least the next two years challenging the original liability verdicts, the compensatory damage awards of $12.7 million given three class members in April, and the class itself, according to analysts.
The defence lawyers will also appeal rulings on evidence and law by trial judge Robert Kaye, who has overseen the marathon trial that began with jury picking on July 6, 1998.