TOBACCO: Jury Orders Five Firms to Pay Record $144.8B
A Miami jury Friday ordered five major U.S. tobacco companies to pay $144.8 billion in punitive damages to half a million sick Florida smokers, the largest damage award in American history, the New York Times reports. After two years of testimony from both sides and a five-hour debate, the six-member jury ordered Philip Morris to pay $73.96 billion, followed by R.J. Reynolds at $36.28 billion, Brown & Williamson at $17.59 billion, Lorillard Tobacco at $16.25 billion and Liggett Group, Inc. at $790 million. These damages are in addition to the $246 billion the tobacco industry agreed in 1998 to pay the states over the next 25 years (Bragg, 7/15). Experts said the jury's decision may kick off a wave of similar suits in other states. "For the moment, this is the realization of the industry's 50-year nightmare," Stanford University law professor Robert Rabin said, adding, "And that nightmare was that when the dam burst it would burst catastrophically" (Meier, New York Times, 7/15). Labeling their verdict a "strong message" to the tobacco industry, jury members said they punished the companies for their 50-year deceit about the destructiveness of cigarettes and called the defense attorneys "unconvincing and insulting" in their attempts to offer alternate causes for plaintiffs' illnesses or to provide evidence that the industry could not afford the heavy verdict (Driscoll, Miami Herald/Washington Post, 7/16). "For a period of 50 years, these tobacco companies denied the dangers of their product," Leighton Finegan, foreman of the jury, said. He added, "They belittled or denied causation of the health effects of smoking and addiction, and had the gall to challenge public health authorities. ... We had a sense of mission. And we did not want to ignore the tremendous devastation that the product has caused. The number had to match that" (Bragg/Kershaw, New York Times, 7/16). Last year, the same Miami jury determined that the tobacco industry knew for decades that cigarettes were harmful and addictive and found the companies guilty of fraud and conspiracy to conceal the truth (Kennedy, New York Daily News, 7/15). In April, the jury ordered the companies to pay $12.7 million in compensatory damages to the three sick smokers representing the class of plaintiffs (AP/Richmond Times-Dispatch, 7/15).
Next Steps and Qualifications
Although the jurors were supposed to base their judgements for this trial only on the tobacco companies' financial resources and current ability to pay, the judge permitted them to consider the industry's "anticipated income," an instruction that likely encouraged the jury to issue a large verdict (Weaver, Miami Herald, 7/15). A state law passed last year could limit tobacco industry damages to $100 million per company, but because the suit was filed prior to the legislation's enactment, it may not pertain in this case. Judge Robert Kaye, who presides over the case, may decide that question as soon as today and also has the ability to reduce the damage awards. Additionally, Florida law prohibits damage awards that would force a company into bankruptcy, but it is still unclear whether Friday's verdict would have that impact on the five affected companies (Bragg, New York Times, 7/15). The final stage of the class action suit -- determining class qualifications -- will proceed unless the verdict is overturned on appeal. Florida legal experts consider it likely that the Circuit Court will hold hearings for all the class members after Kaye enters his final judgement on damages. As the court has previously defined the Florida class as "all Florida citizens and residents and their survivors, who have suffered, presently suffer or who have died from diseases and medical conditions caused by their addiction to cigarettes," as many as 500,000 people may be plaintiffs in the case (Zawada, Winston-Salem Journal, 7/16).
Big Tobacco Vows to Appeal
Calling the damage award "ridiculous" and asserting that the obligation to pay such amounts would easily bankrupt their companies, tobacco executives and their defense lawyers are preparing to appeal the jury's decision. "There is no industry in America, there's probably not a country in the world, that could withstand a verdict of this size," Philip Morris attorney Dan Webb said (Bragg, New York Times 7/15). He added, "Philip Morris is extremely confident that this case will be reversed on appeal. The errors committed by the court were extraordinary. The fact that the judge allowed a jury to award such enormous punitive damages to hundreds of thousands of unidentified and unknown smokers without hearing any evidence whatsoever about the validity of their claims has never happened in American history and it will undoubtedly never happen again." Webb and other tobacco attorneys have argued that the punitive judgement cannot be finalized until all members of the Florida class file and win individual suits for damages proving their injuries were cigarette-related, a process that could take an estimated 75 years (Miami Herald, 7/15). Echoing the industry's concerns, the U.S. Chamber of Commerce called the decision "an obscene symptom of a court system that is out of control." But even if the tobacco companies never pay a dime in the case, as defense lawyers predict, the verdict is a "major setback" for an industry that has been hit with a substantial number of lawsuits in recent years, offering a "stinging rebuke" to companies' claims that they are "now responsible corporate citizens." Sen. Richard Durbin (D-Ill.) said of the ruling, "It's hard to feel sorry for the tobacco industry, which never felt sorry for its victims. If this holds, it will be a different industry" (Kaufman, Washington Post, 7/15).
In Praise of Tobacco's Punishment
Plaintiffs' attorneys hailed the decision, calling it an "appropriate punishment for an industry that makes a product that kills 430,000 Americans every year, and for misleading the public about the dangers even after medical research showed that smoking causes cancer" (Braggs, New York Times, 7/15). Stanley Rosenblatt, lead attorney for the plaintiffs' case, said of the trial, "It was a day of reckoning. This was never about the money. This was about showing these companies up for what they are" (New York Daily News, 7/15). Joining in with accolades were the American Lung Association and the American Heart Association. Calling the verdict "long overdue retribution for decades of pain, suffering and death inflicted on millions of Americans," the American Lung Association applauded the jury for discounting the "pleas of poverty and crocodile tears shed by the tobacco company CEOs" and the "slick PR attempt to portray the industry as a good corporate citizen" (ALA release, 7/14). The American Heart Association commended the jury for its "landmark punitive damage judgement and its message to the tobacco industry that its disregard and contempt for public health and human life does have an equally high price" (AHA release, 7/14).
States Raise Concerns
The tobacco companies are not the only parties concerned by the jury's decision. Tobacco-producing states could face an economic crisis should the companies be made to pay the awards, officials warned on Saturday. "From the thousands of employees at Philip Morris, to the farmers ... and to the ports, it could just be devastating," Senate candidate and former Virginia Gov. George Allen (R) said of the award's potential impact on Virginia's economy. Allen's opponent for the Senate seat, Sen. Charles Robb (D), agreed, saying, "I don't think it was an appropriate verdict. When it comes to the (national) tobacco settlement, I've always supported a cap on punitive damages so a jackpot plaintiff can't walk away with the keys to the company and put tobacco workers and farmers out of their jobs (Drummond, Washington Times, 7/16). Louisiana Treasurer John Kennedy said he worries that the ruling could affect annual payments on the state's $4.6 billion share of the national settlement. "This is just another reason why we can't afford to gamble with money dedicated to health care and education on the future of the tobacco industry," he said (AP/Richmond Times-Dispatch, 7/16).