Record Judgment Against Big Tobacco

July 15, 2000 -- A Miami jury ordered Big Tobacco to pay nearly $145 billion on Friday to sick Florida smokers, but the cigarette companies say they will never have to pay a dime.

The award — the largest punitive damages verdict ever rendered in a U.S. product liability trial — orders the nation’s top five cigarette makers to pay Florida residents who have developed health problems because of smoking, but the firms say they expect the decision will be reversed.

During the trial, tobacco attorneys argued that the award should only be in the millions, and that the 12-digit figure sought by plaintiffs would have all but bankrupted them.

“That’s a request for a death warrant for each of these five companies,” said lead tobacco attorney Dan Webb, who represents Philip Morris Inc., the largest U.S. tobacco company, as well as the world’s largest. “It’s more than financially destroyed. They’re gone.”

Webb told a news conference immediately after the verdict the money will never be paid because it will be overturned on appeal. He called it “a verdict in favor of no one” since the hundreds of thousands of plaintiffs who are said to be victims of the tobacco companies’s polices are not named in the suit.

A year ago, the same jury found the five tobacco companies guilty on a broad range of health and truthfulness issues and awarded a total of $12.7 million in compensatory damages to three named plaintiffs. Friday it deliberated less than five hours.

The jurors said that Philip Morris, the world’s largest tobacco company, should pay $73.96 billion, R.J. Reynolds should pay $36.28 billion, Brown & Williamson should pay $17.59 billion, Lorillard Tobacco should pay $16.25 billion and the Liggett Group should pay $790 million. It also said that two separate industry groups should pay a combined $1.47 million in damages.

The total: $144,871,473,549.

Wall Street appeared unphased by the verdict, as the companies’ stocks were down less than a dollar per share.

“It will be almost meaningless for the industry going on forward,” said Martin Feldman, the tobacco analyst at Solomon Smith Barney. “It will not impact their cash flows.”

‘Very Strong Signal’

Still, tobacco opponents were heartened by the jury decision.

“It’s a day of reckoning” lead plaintiff attorney Stanley Rosenblatt told a news conference. “This was never about money only. This was about showing these companies up for what they really are.”

“This is by far the strongest signal to date that the American public has really had it with business as usual by the tobacco industry,” said Mitch Zeller, executive vice president of the American Legacy Foundation, an anti-tobacco organization. “Especially when the product we are talking about is the leading preventable cause of death and disease. In terms of sending a signal, this is a very strong signal from that jury.”

Other anti-tobacco groups joined in the jubilation.

“The jury spoke loud and clear: Tobacco must be held accountable for its wrongdoing,” John R. Garrison, CEO of the American Lung Association, said in a statement. “The pleas of poverty and crocodile tears shed by tobacco company CEOs during the trial were discounted by the jury. The jurists saw through the slick PR attempt to portray the industryas a good corporate citizen.”

The trial, which started in July 1998, is a landmark for the tobacco industry because of the size of the award and because it is the first time a smokers’ class action has made it to trial.

“The decision is mindboggling,” said Phil Carlton, a Raleigh, N.C. lawyer who represented tobacco companies in the industry settlement with states that exceeded $200 billion over 25 years. “Numbers like this are beyond belief and clearly at such a level that the companies could not possibly pay anything like this. That’s a bankruptcy number.”

Feldman said that even though the award amount is not likely to hurt the tobacco companies’ bottom line, it will have stinging impact in the court of public opinion. “Every time a case is lost (by a tobacco company) a plaintiff’s lawyer will take a look at suing the industry.”

‘Death Warrant’

In closing arguments this week, Rosenblatt told jurors that the tobacco companies should be made to pay damages in the range of $123 billion to $196 billion, but that “an appropriate, just number would be $154 billion.”

During jury instructions this morning, Circuit Judge Robert Kaye told the six-person jury it could only award damages based on the companies’ current ability to pay and could not sanction them into bankruptcy. The tobacco attorneys this afternoon said the jurors ignored those instructions and that their verdict was meaningless. “My client will not settle this case,” Webb said.

For his part, plaintiff attorney Rosenblatt launched into a tirade against the tobacco companies and Geoffrey Bible, the chief executive officer of Philip Morris. “Mr. Bible, call me next week. Yeah, call me,” he said, angrily pointing toward the cameras at the news conference.

The trial has so far lasted two years and has accumulated testimony from 157 witnesses filling 58,000 pages.

The jury earlier found that cigarettes are addictive, defective and unreasonably dangerous and cause 20 diseases or medical conditions. It said the tobacco companies made false statements with the intent to mislead smokers and that they hid information concerning the health impacts and addictive nature of cigarettes. Additionally, the jury said the defendants were negligent and engaged in extreme and outrageous conduct or acted with reckless disregard with the intent to inflict emotional distress.

Appeal on the Way

Tobacco companies and industry analysts have said the award is likely to be overturned on appeal because the claims of the thousands of individual plaintiffs are so varied that they should not be tried as a single class action. Other judges have ruled that the individual issues overwhelm the common issues.

The class consists of all Florida residents and citizens, and their survivors, “who have suffered,presently suffer or have died from diseases and medical conditions caused by their addiction to cigarettes that contain nicotine.” Attorneys estimate that will include 300,000 to 700,000 people.

Philip Morris has already promised its shareholders it intends to win the case on appeal. In its quarterly report, the company outlined its legal liabilities and said it “intends to challenge the class certification, as well as numerous other reversible errors that it believes occurred during the trial to date, at the earliest time that an appeal of these issues is appropriate under Florida law.”

Brown & Williamson said its company plans an “immediate appeal.”

“We simply can’t believe the jury would totally ignore theextensive efforts Brown & Williamson has made in the lastseveral years to reduce youth smoking, to work on producingsafer cigarettes and to be open and accessible to the public,” said Gordon Smith, lead attorney representing the company in a statement.

The company will not be required to pay the award immediately,and believes it will never have to, Smith says.The company said the appellate courts are bound to correct what the company believes is an “ incredible miscarriage of justice.”

ABCNEWS.com’s Amy Collins and Julia Campbell contributed to this report.