Award May Be Blocked in Smokers’ Lawsuit
Florida’s highest court signaled Wednesday that it might head off a lump-sum damage award that could exceed $100 billion in a smokers’ health class-action suit against Philip Morris Cos. and other tobacco makers.
In an unexpected move, the Florida Supreme Court ordered lawyers for the smokers to respond to a bid filed Friday by the companies that would keep the jury from awarding a lump-sum award. The tobacco industry wants damages decided on a smoker-by-smoker basis. The court said it will allow the current damages phase of the case to continue in a Miami courtroom as it awaits the plaintiffs’ response.
“If the Florida Supreme Court is willing to get involved in this one issue, it improves the chances they’ll review the entire case later,” said analyst Roy Burry at Brown Bros. Harriman & Co.
The news sent shares of tobacco stocks higher on the New York Stock Exchange. Philip Morris, maker of the top-selling Marlboro cigarettes, gained $2.94 to close at $26.94, and R.J. Reynolds Tobacco Holdings Inc. rose $1.81 to close at $21.88.
The six-person jury in July found the industry liable for causing death and disease among smokers. A Florida appeals court briefly overturned Judge Robert Kaye’s decision to permit a lump-sum award, which some analysts said could bankrupt smaller tobacco companies.
The appeals court reversed itself Oct. 20, and Friday, the industry turned to the state’s highest court for help. In its appeal, the industry said that allowing a lump-sum ruling is unconstitutional and would cause “irreparable harm” to companies.
“The Florida courts should not be perceived as permitting corporate defendants to be terrorized into blackmail settlements,” the industry said in the filing.
The state high court asked attorneys for the Florida smokers to respond to its order by Nov. 15.
The class of plaintiffs represented by the suit could include as many as 500,000 Florida smokers; analysts said a class that large could lead to hundreds of billions of dollars in damages against the industry.
Analysts have said it is unlikely the Florida Supreme Court will block a lump-sum award while the trial is in progress. The fact that the companies are attempting now to have the high court hear their appeal shows that “tobacco lawyers are leaving no stone unturned,” analyst Marc Cohen at Goldman, Sachs & Co. said Wednesday in a research report.
The high court review at this juncture is a “well put-together longshot,” Cohen said.
A gag order bars lawyers in the case from commenting.
Defendants include Philip Morris, R.J. Reynolds, Loews Corp.’s Lorillard Tobacco, British American Tobacco’s Brown & Williamson, Brooke Group Ltd. and two industry trade groups.
