Liggett Settlement for Smokers Rejected

Bloomberg News

Brooke Group's Liggett unit, the U.S.' No. 5 cigarette maker, failed to win court approval of an across-the-board settlement with smokers seeking damages for tobacco-related illnesses. Alabama Circuit Judge Robert Kendall in Mobile rejected Liggett's agreement to pay $25 million to sick smokers to settle all its U.S. tobacco litigation. The judge cited a U.S. Supreme Court decision last month throwing out a $1.5-billion asbestos class-action settlement. Liggett's plan would have given consumers 9% of the company's annual pretax income, or at least $1 million a year for the next 25 years. A fund would have distributed the money, and smokers wouldn't be allowed to opt out of the settlement and file their own lawsuits--removing the threat to Liggett of any further liability. A Brooke Group spokesman said the company is reviewing its options. During a hearing before Kendall on June 10, a Liggett consultant testified that without the settlement, mounting claims estimated at more than $46 million so far would force Liggett into bankruptcy. Brooke Group's shares closed unchanged at $22.31 on the NYSE.

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