$145bn award against tobacco giants goes up in smoke
[FONT=Verdana, Arial, Helvetica, sans-serif]By Daniel Pimlott in New York[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Financial Times[/FONT]
Updated: 5:12 p.m. ET July 6, 2006
<SCRIPT language=javascript> function UpdateTimeStamp(pdt) { var n = document.getElementById("udtD"); if(pdt != '' && n && window.DateTime) { var dt = new DateTime(); pdt = dt.T2D(pdt); if(dt.GetTZ(pdt)) {n.innerHTML = dt.D2S(pdt,(('false'.toLowerCase()=='false')?false:true));} } } UpdateTimeStamp('632878171500000000'); </SCRIPT>[FONT=Verdana, Arial, Helvetica, sans-serif]The Florida Supreme Court on Thursday upheld a decision to throw out a $145bn award of damages against some of America's top tobacco companies. It had been the biggest punitive damages award in US history.[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]The ruling was a victory for the tobacco industry, which in recent years has seen its businesses seriously threatened by lawsuits and huge damages awards relating to illnesses caused by smoking. The news provided a major lift to stocks in tobacco companies.[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Shares of Altria Group, which owns Philip Morris, rose 7.4 percent to $78.70 by midday in New York. Shares of Reynolds American were up 4.8 percent to $119.90, down from an earlier record high of $120.50. Carolina Group, the tracking stock for Loews Corp.'sLorillard Tobacco Co., also hit a record high, of $55.26, before slippling slightly to $54.40, up 6.3 percent.[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]The award had resulted from a 1994 smokers' class action lawsuit in Florida against cigarette companies and industry organisations for smoking-related illnesses.[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]The suit led to a ruling in 2000 that tobacco companies had misled smokers about the dangers of smoking. and had to pay an estimated 700,000 Florida smokers suffering from smoking-related afflictions $145bn in damages.[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Florida's Third District Court of Appeal overturned the verdict in 2003, ruling that an earlier settlement between the Florida State government and cigarette companies also covered individuals seeking compensation in the class action, and so barred the award of punitive damages. That ruling also said that a class action for injury was not permissable, and people who suffered illnesses caused by smoking would have to pursue their cases individually.[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]The Supreme Court said on Thursday that it considered the award too great because, among other reasons, of the effect it would have had on the tobacco companies.[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]"The amount awarded is also clearly excessive because it would bankrupt some of the defendants," the court said.[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]The court said that it was right for the award to be thrown out because the punitive damages element of the claim had been decided before the compensatory element of the claim, which "as a matter of law...violates due process because there is no way to evaluate the reasonableness of the punitive damages award". [/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]The Supreme Court, however, reinstated damages awarded to two of the individual complainants, ordering the tobacco companies to pay $2.85m to Mary Farnan and $4.02m to Angie Della Vecchia.[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Defendants in the case include Altria Group's Philip Morris USA, R.J. Reynolds and Brown & Williamson of Reynolds American, Lorillard of Loews Corp and Vector Group's Liggett.[/FONT]
