Lawmakers Insulate Tobacco Cos.
TALLAHASSEE, Fla. (AP) -- The Legislature approved a measure Friday aimed at protecting tobacco companies from financial ruin brought on by damages in a class action lawsuit by capping how much they must pay to appeal those damages.
The move is in an effort to preserve the flow of billions of dollars that the companies owe Florida over the next two decades as part of a 1997 settlement.
The state sued cigarette makers to recover money spent treating sick smokers. Under the settlement, cigarette makers must pay the state hundreds of millions of dollars a year -- a total estimated at more than $13 billion over the next 25 years. The companies also made non-economic concessions, such as restrictions on advertising.
But the money flow is dependent on the companies staying solvent. As they face other lawsuits, cigarette makers have warned they may face ruin. The industry has recently warned that new lawsuits, particularly a massive class action suit brought by sick Florida smokers, may bankrupt it.
The class action lawsuit, being heard in Miami, is in the punitive damages phase. The jury has already found the industry guilty of conspiring to produce a defective product. The industry has said the jury could award damages as high as $300 billion.
The bill caps the bond amount the companies would have to put up to appeal the damages at $100 million, or 10 percent of their net worth.
The legislation was approved unanimously.
In addition to the bond provision, the bill would establish a mechanism to sell off part of the future income to investors. The full Legislature would have to approve selling the income, however.
Gov. Jeb Bush said he was pleased by the bill's passage. He originally proposed selling off the income to investors, but said he wasn't concerned that that couldn't happen immediately.
``We don't need to act very quickly,'' Bush said. ``Right now is not the time to be going into the market for ... selling bonds or anything until there's some stability and understanding how some of these court cases are going to come out.''