Tobacco Stocks Gain on News of Suit Dismissal : Smoking: Cigarette makers are cheered by the ruling on drug class action brought by hemophiliacs.

Tobacco company stocks gained sharply on Monday as the industry celebrated the dismissal of a hemophiliacs’ class action against drug companies, saying the ruling could help end a massive suit filed against cigarette makers on behalf of millions of addicted smokers.

Shares of New York-based Philip Morris surged $2.875 to close at $66.625 as Standard & Poor’s tobacco stock index rose 3.9%, making it the leading gainer among all groups.

Legal scholars and plaintiffs’ lawyers said, however, that the hemophiliacs’ and smokers’ cases are only superficially similar and that the facts in the two suits make them too different to compare.

“I don’t think this has anything to do with tobacco,” said Donald Garner, a law professor at Southern Illinois University. “I see it as a perhaps-justifiable response to the fear that juries are going to bankrupt companies that are good for America, but I don’t think there is any love lost between the American judiciary and tobacco companies.”

Even if the circumstances were similar, the lawyers said, the ruling in the U.S. Court of Appeals for the 7th Circuit is not binding on the 5th Circuit, where the tobacco case is pending.

Richard Posner, chief judge of the U.S. 7th Circuit Court of Appeals in Chicago, on Thursday invalidated the class action filed on behalf of hemophiliacs believed to be infected with the virus that causes AIDS.

The plaintiffs allege that the drug companies were negligent in manufacturing blood-clotting medicine and failing to treat it for HIV.

The court’s ruling was 2 to 1. Posner said he was dismantling the class action for several reasons. Among them, he said, was that the trial judge had abused his discretion by creating a two-step trial procedure.

Under this procedure, a jury would first determine whether the drug companies were negligent.

If negligence were proven, then class members would be able to pursue damage claims in separate trials.

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The judge said the jury verdict in the first phase of the case might threaten drug companies with exposure to such liability that they could be irreparably harmed, perhaps even driven into bankruptcy.

Tobacco lawyers said the two-step procedure is similar to the one created by a New Orleans federal judge who certified the tobacco class action on Feb. 17.

The tobacco industry is appealing that ruling. It creates what promises to be the nation’s largest class action, representing as many as 90 million current and former smokers.

Robert Weber, a Cleveland lawyer who represents R.J. Reynolds, said the trial judge’s certification of the hemophiliacs’ class action had been cited by the smokers joining the suit against the tobacco industry.

“On a bottom-line basis, this is a case the plaintiffs relied upon. It has now been reversed, and I view this as a very positive development in terms of the way the law looks at attempts by these groups of plaintiffs’ lawyers to create a judicial crisis when there isn’t one,” Weber said.