Miami Jury May Burn Big Tobacco With Record Award

After deciding cigarette makers are to blame for smokers’ illnesses, a jury now is on the verge of punishing Big Tobacco with what could be a record punitive damages award.

In closing arguments set to start today in a Miami courtroom, smokers’ attorney Stanley Rosenblatt in the pioneering class action known as the Engle case is expected to specify an amount for punitive damages to be sought from the nation’s five biggest cigarette makers.

Witnesses in the landmark class-action case, filed on behalf of 300,000 to 700,000 sick Florida smokers, contended that the companies could afford to pay $150 billion.

Rosenblatt’s lawsuit listed $200 billion, and this week he is expected to put a price tag on the punishment he believes the defendants should receive.

Lead tobacco attorney Dan Webb has mentioned a possible $300-billion award, saying it could wreck the industry. “These companies have their survival at stake,” he warned.

Although the industry wants a punitive verdict of zero, it sought an upper limit of $15.3 billion, an amount it said represented the net worth of all the companies. Circuit Judge Robert Kaye said he would not impose that cap on the jury.

Any award would be appealed, and the impact on an industry already paying out $10 billion a year in settlements is difficult to assess. The case is expected to go to the jury late this week but take at least two years to move through Florida appellate courts.

Given the numbers the jury has heard, the verdict could easily set a new U.S. record in punitive damages in a product liability case, surpassing the $4.8-billion judgment against General Motors last year in a California car fire. A judge slashed that award to $1.09 billion.

Florida law says a punitive verdict cannot put a company out of business, and judges are required to reduce any award that would. Tobacco companies have never paid a penny in punitive damages.

The jury already has decided the industry makes a deadly, defective product and awarded $12.7 million in compensatory damages to three smokers with cancer. The smokers argue the industry should be required to pay for 45 years of lies, fraud and conspiracy.

Soon after testimony in the Florida case began, the industry settled lawsuits with all 50 states. In the next 25 years, payments are expected to total $254 billion.

The tobacco companies have argued that’s enough to pay and that no punitive damages should be awarded. But Robert Hirschhorn, a Texas-based jury consultant who has been recruited by both sides in tobacco cases but took none, believes jurors will hold the settlements against the defendants.

“Agreeing to pay large settlements affects people’s perceptions on the question of whether or not the tobacco companies are right or wrong on these issues,” he said. “You don’t pay out $100 billion if you haven’t done something wrong, even if you don’t admit it.”

The key tobacco defense against punitive damages is that the industry has changed its ways since attorneys general began suing in 1994, the same year the smokers’ suit was filed.