Tobacco Verdict to Help Users Kick Habit

A jury in New Orleans on Friday ordered U.S. tobacco companies to spend $591 million to assist Louisiana smokers who want to kick the habit, marking the first time the industry has been directed to help its customers quit.

The state court verdict came in a class-action suit on behalf of about 1 million Louisiana smokers, whose lawyers called for a huge investment in smoking cessation to remedy what they described as a decades-long conspiracy to distort the risks and addictiveness of smoking.

Jurors decreed that the money be spent over 10 years on a dozen specific activities, including public education, telephone hotlines and reimbursement for purchases of stop-smoking medications.

The size of the verdict could grow by as much as $300 million under a Louisiana law that allows interest on judgments from the time a suit is filed -- in this case 1996. But the industry will oppose this, and appeals of the verdict are likely to delay a resolution for months, if not years.

Anti-tobacco activists and lawyers hailed the outcome, while industry officials said that it would only create a swollen bureaucracy and that the case never should have been granted class-action status.

“The record is so riddled with error that this trial has become the poster child for judicial waste and inefficiency,” said Ron Milstein, vice president and general counsel for Lorillard Tobacco Co., a unit of Loews Corp. and the fourth-largest U.S. cigarette maker. The other defendants are Philip Morris USA, a subsidiary of Altria Group Inc.; R.J. Reynolds Tobacco Holdings Inc.; and the Brown & Williamson Tobacco Corp. unit of British American Tobacco.

“This is a great victory for the health of hundreds of thousands of people addicted to smoking in Louisiana,” said Russ Herman, lead counsel for the plaintiffs, who added that he and several other members of the trial team had lost parents to smoking-related diseases. The verdict means “there is hope for the smokers of Louisiana who have tried desperately to stop smoking,” he said.

Ed Sweda, a senior attorney for the Tobacco Products Liability Project, a Boston-based group that promotes lawsuits, said he was delighted with the outcome and hoped that it “can be replicated in other states.”

It’s unclear whether the verdict will trigger similar filings elsewhere. Numerous state and federal courts have rejected class certification for tobacco suits, with the Louisiana suit being one of the few to gain class-action status.

Another, filed on behalf of California smokers and pending in San Diego, accuses the industry of false advertising and seeks disgorgement of profits. Should the case succeed, the court would have to decide whether to earmark proceeds for smoking cessation or other purposes.

The verdict continued a run of bad news for cigarette makers, which until lately had seemed to regain the momentum in courtroom battles over smoking.

Last week, the Florida Supreme Court agreed to review an appeals court decision that threw out a record punitive damages award of $144.8 billion in a class-action case.

This week, a $1.25-billion legal fee award to a group of anti-tobacco lawyers that had been tossed out as grossly excessive was reinstated by an appeals court in New York.

And tobacco companies have been unsuccessful in winning a dismissal or limitations on damages in a massive fraud and racketeering suit by the Justice Department. Government lawyers are seeking disgorgement of $289 billion in supposedly ill-gotten gains. The case is scheduled for trial in September.

Friday’s verdict came in the second phase of a marathon trial that began in January 2003, after more than a year of conflict over jury selection. At the conclusion of the first phase in July, jurors found that the companies had conspired to distort public knowledge about the risks of smoking and consciously sought to addict consumers.

The jury rejected the most expensive remedy urged by plaintiffs: a multibillion-dollar medical monitoring program for smokers aimed at giving early warning of disease. But the panel agreed that the industry should help smokers to quit. The second phase -- to determine the scale and duration of the program -- began in March.

Altria shares edged up 7 cents Friday to $49.32, RJR rose 34 cents to $57.26, and Carolina Group, a tracking stock for Lorillard, was up 40 cents to $23.36. All trade on the New York Stock Exchange.