North Carolina moves to shield tobacco assets
RALEIGH, N.C., March 30 (Reuters) - North Carolina Gov. Jim Hunt on Thursday called a special legislative session in April to consider a bill to shield tobacco assets from a potentially devastating jury award in a Miami class-action lawsuit.
Legislators in North Carolina, the country's largest tobacco-growing state, are drafting a bill that would place a $25 million cap on bonds that could be issued against assets of tobacco companies in the state while they appeal a jury award that analysts fear could bankrupt the industry.
``In addition to threatening thousands of jobs in North Carolina, this situation could wipe out the settlements reached with tobacco companies to fund payments to families, tobacco communities and health programs, including anti-teen smoking initiatives,'' Hunt said in a statement announcing the session.
North Carolina is home to R. J. Reynolds Tobacco Co., the nation's second-largest cigarette maker based in Winston-Salem, and Liggett Group, which is headquartered in Durham. Each of the nation's five largest tobacco makers have significant operations in the state.
Analysts say a Miami jury could award $300 billion or more in punitive damages in the Engle class-action lawsuit, named after a Miami Beach pediatrician and brought on behalf of about 1 million ill smokers in Florida against the tobacco industry.
Under Florida law, tobacco companies would have to post bonds secured against assets like cigarette plants, inventories and other property to cover the amount of the award while the case was under appeal.
Experts fear a huge jury award could bankrupt the U.S. tobacco industry and put in jeopardy a $246 billion out-of-court settlement between tobacco companies and state attorneys general.
``We and many others in North Carolina support the governor's request for a special session and believe it is in the best interest of the state for the legislature to approve measures ensuring the rights of appeal and due process,'' R.J. Reynolds said.
Legislators in Virginia and Georgia have already placed caps on the amount of bonds that could be secured against tobacco assets in those states, and similar legislation was being considered in Kentucky.
North Carolina produces about 37 percent of the nation's tobacco, a cash crop worth about $1 billion a year to farmers in the state.
The special session of the North Carolina General Assembly will open on April 5.