Tobacco Chief: $50B Verdict Is High
MIAMI (AP) - Philip Morris' tobacco chief says his company cannot afford to split even half of what Big Tobacco could be forced to shell out in a landmark smokers' case against the industry.
Michael Szymanczyk's remarks came in a deposition taken in preparation for his testimony against a potentially record-breaking punitive damage in a class-action lawsuit. He was asked if Philip Morris could absorb the cost of splitting a $50 billion punitive verdict.
``We would not be able to pay this money if it was due in 30 days - or in two years, for that matter,'' said Szymanczyk, president and chief executive officer of Philip Morris Inc. ``We wouldn't be able to pay that money.''
Szymanczyk estimated the net worth of industry-leading Philip Morris at $7.1 billion. Asked if the company's tobacco arm would go into bankruptcy court, Szymanczyk said, ``I don't know what we would do.''
But what the tobacco industry can afford will be up to jurors, who this week are expected to start hearing testimony in the punitive phase of the landmark case. An estimated 500,000 sick Florida smokers are seeking $100 billion in punitive damages. After a week delay, opening arguments were expected to begin today.
The jury already has ruled against the industry twice, deciding the nation's five biggest cigarette makers conspired to produce a deadly product and awarding $12.7 million in compensatory damages to three smokers representing the half million smokers.
Florida law bars a punitive verdict from driving a company out of business, but the party seeking damages normally sets the amount without a judge's intervention.
Circuit Judge Robert Kaye will allow the industry to tell jurors about the money it owes on lawsuit settlements with states as a cost of doing business but was adamant that the expense could not be characterized as punishment because it was voluntary.
The industry wants the jury to award nothing based on the changes it has made since cigarette makers settled state lawsuits for $250 billion in 1997 and 1998.
Attorneys for smokers charge the industry's assertion that it has changed its ways is just another smoke screen from a business that perfected them.
A key promise was an end to youth marketing, but two studies released last week indicate more cigarette advertising in magazines with high teen readership since the settlements.
In Szymanczyk's May 10 deposition, he said cigarette sales to kids are bad for his business, but he rejected assertions that company advertising targets youths.
``It's bad for my business for kids to be buying cigarettes,'' he said.
Industry-leading Philip Morris, a subsidiary of Philip Morris Cos. Inc., had half of the U.S. cigarette market and $19.6 billion in revenues last year. Its Marlboro line, the dominant national brand, accounted for 36 percent of all domestic sales.
The defendants are Philip Morris, R.J. Reynolds, Brown & Williamson, Lorillard Tobacco Co., Liggett Group Inc. and the industry's defunct Council for Tobacco Research and Tobacco Institute.
The case was delayed by the judge who needed the time to resolve a stack of motions that piled up while he was on vacation.