In the first tobacco case that centered on claims that low-tar cigarettes are less hazardous, a jury in Portland, Ore., on Friday ordered Philip Morris to pay $150 million to the heirs of a woman who died of lung cancer at age 53. It was the second-lar

After deliberating nearly five days, the Portland panel awarded the heirs of Michelle Schwarz $168,000 in compensatory damages. However, the panel hammered the world's largest cigarette company with a punitive-damage award of $115 million for fraud, as well as $25 million for negligence and $10 million for strict liability for marketing a defective and unreasonably dangerous product. Philip Morris immediately announced that it wou ld challenge the verdict on several grounds. The verdict was "inconsistent with the law and with the facts of the case," said William S. Ohlemeyer, vice president and associate general counsel at Philip Morris. "This verdict was more of a general referendum on what the jury thought of Philip Morris than on the facts of this case.... The court did not require the jury to connect the conduct of Philip Morris to Michelle Schwarz in a way the law requires it to be connected in order to return a verdict like this," Ohlemeyer said. During the six-week trial, the plaintiffs' lawyers emphasized that Schwarz had switched from Benson & Hedges to Merit, a Philip Morris brand marketed as having lower tar and nicotine. Jurors were asked to answer a series of questions on the verdict form. Question 13 was the most crucial, according to plaintiffs' attorney Chuck Tauman. It asked: "Did Philip Morris make representations that 'low tar' cigarettes delivered less tar and nicotine to the smoker and were ... safer and healthier than regular cigarettes and an alternative to quitting smoking upon which Michelle Schwarz reasonably relied, and if so, were such false representations and reliance a cause of Michelle Schwarz's death?" Ten jurors answered yes and two answered no. For the plaintiff to prevail in a civil trial in Oregon, the plaintiff must get nine or more votes. "That was the punch line to the case," Tauman said Friday. "We introduced evidence showing that Philip Morris knew as early as the 1960s that when you reduce the tar in a cigarette you also reduce the nicotine. Nicotine is why people smoke, and in order to get the same amount of nicotine they got from their regular cigarettes, they would smoke more cigarettes or puffed more deeply," to their detriment, Tauman said. In November, the National Cancer Institute released a comprehensive study saying that popular low-tar and so-called light cigarettes are worthless as a way to reduce health risk s to smokers. About 80% of the nation's smokers now consume light cigarettes. The verdict marked the fifth time in recent years that juries in California and Oregon have rendered large verdicts against the tobacco companies--including one in Los Angeles for $3 billion that was reduced to $100 million by a judge--in distinct contrast to company victories in most other litigation. During a period of 35 years starting in 1960, cigarette makers won virtually every trial by shifting attention from themselves to the foolishness of smokers, who persisted in their habits despite health warnings. Overall, the cigarette companies have won more than three-fourths of all the cases that have gone to verdict. But the industry's fortunes began to change in the mid-1990s after reams of secret internal documents came to light showing that the companies long knew of the health hazards and addictiveness of their products. The industry lost an individual smoker case in 1996 in Florida, and during the next two years the companies agreed to settlements totaling close to $250 billion to fend off suits filed against them by the states seeking to recoup tax money spent treating sick smokers. Since then, the industry has lost five cases brought by individual smokers on the West Coast and was hit by a $145-billion damage judgment in the summer of 2000 in a class-action case in Florida. In the latest Oregon case, Philip Morris attorneys asked for a mistrial during jury deliberations after it was discovered that some documents that the judge had excluded from evidence were in the jury room. Judge Roosevelt Robinson denied Philip Morris' motion but gave the jury a cautionary instruction and asked them to reconsider any issues where they had relied on any of the documents that were not in evidence. Ohlemeyer said that matter would be a part of the company's appeal. Ohlemeyer also said the company would ask the trial judge to dramatically reduce the amount of the puniti ve damages on the grounds that the ratio of punitive damages to compensatory damages--about 900 to 1--"far exceed the 4-to-1 ratio the U.S. Supreme Court has suggested may come close to the constitutional level of reasonableness." Tobacco analysts Martin Feldman of Salomon Smith Barney and Bonnie Herzog of Credit Suisse First Boston both said they thought the punitive award would be slashed, as has happened in several recent cigarette cases. Still, none of those recent verdicts has been overturned and an appeal in this case could last years. Consequently, the outcome shook some cigarette company insiders. For Philip Morris to lose a case in which the plaintiff was a doctor who had quit smoking and was representing the estate of his wife--a nurse who had smoked for years--is an ominous sign, said an industry lawyer who spoke on condition of anonymity. If Philip Morris "can't win a case on these facts ... that's pretty serious," he said. "If you've got a plaintiff who was a nurse, ... worked in her husband's medical office, and the guy himself was the plaintiff, I don't know where you go from there," the attorney said. The outcome "shows that Philip Morris has not found a strategy to convince jurors on the West Coast to vote in its favor," Feldman said. Ed Sweda, senior attorney for the Tobacco Products Liability Project at Northeastern University in Boston, was jubilant over the outcome. "We are thrilled with the verdict," said Sweda, whose group encourages litigation against the cigarette companies. "Clearly this has to rattle the executives at Philip Morris because there are so many potential plaintiffs out there in a similar situation--people who switched to light cigarettes thinking they were helping themselves but came down with a life-threatening or fatal disease." There were four plaintiffs in the case, all of whom are eligible for a portion of the recovery under Oregon law: Dr. Richard Schwarz, the husband of the deceased smoker; h is sons Michael and Paul; and Shirley Chuck, the mother of Michelle Schwarz.

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