Fla. Bill Could Protect Tobacco Industry From Massive Award

A campaign is building in the Florida Legislature to save the tobacco industry from a potentially catastrophic punitive- damages award in the landmark Engle class-action case in Miami.

Under a bill that may be introduced as early as today, sponsors hope to bar the risk of a lump sum punitive-damages award to an immense class of current and former Florida smokers.

The effort appears aimed not so much at protecting tobacco companies as preserving the flow of tobacco industry settlement payments to Florida and other states, which some officials fear could be interrupted by a damage award in the Engle case that could reach into the hundreds of billions of dollars.

As reported last week by The Times, some state attorneys general have begun hiring bankruptcy lawyers to advise them in case some major tobacco companies seek bankruptcy protection because of a big award in the Engle suit.

Many of the attorneys general, who in 1997 and ’98 agreed to out-of-court settlements with tobacco companies, fear this would interrupt the flow of payments to states, which are supposed to amount to $246 billion over 25 years.

The bill was drafted by Florida Atty. Gen. Robert A. Butterworth, one of the leaders of the massive legal assault on Big Tobacco by the states. A copy of the proposed measure and a legal opinion signed by Butterworth and sent to Florida Senate President Toni Jennings and House Speaker John E. Thrasher were obtained Wednesday by The Times.

The bill would “put it up in . . . simple language that every judge can understand,” said Martin Feldman, a tobacco analyst with Salomon Smith Barney, who disclosed the effort Wednesday in a memo to his clients.

Butterworth, in a phone interview Wednesday night, said he prepared the bill in response to lawmakers’ requests. He said he was not concerned about protecting settlement payments to the state or in helping cigarette makers forestall a crippling punitive damages award in the Engle case.

“I think tobacco is the evil empire,” Butterworth said. “I don’t care if they go bankrupt.”

In the Engle case, the same jury that last year found cigarette makers guilty of lying about the hazards and addictiveness of smoking is expected to begin deliberations next week on whether to award compensatory damages to three cancer victims designated as class representatives.

Under the trial plan ordered by a Dade County judge, if any of the three get compensatory damages, the jury would then decide whether to award punitive damages in a single lump to the entire class. Most observers believe the punitive-damages award could be in the tens or even hundreds of billions.

Tobacco companies contend that under the law punitive damages must be considered one plaintiff at a time, and only after a plaintiff wins a compensatory verdict.

The bill drafted by Butterworth would declare that it is already the law in Florida that punitive damages can be awarded only after compensatory verdicts are reached.

The Engle trial plan “just flies in the face of all common law throughout the country, including Florida,” Butterworth said. “The law in Florida is perfectly clear that in order to have punitives, you must first” get compensatory damages.

“If you have three cases before you, you cannot do punitives for the whole state of Florida,” he said.

Although tobacco officials have said they believe they would prevail in an appeal of a lump sum punitive-damages award, their immediate problem might be posting a bond to forestall payment of the judgment while bringing the appeal.

Typically, an appeal bond must cover the full amount of the award, plus 20% interest. Thus appealing a punitive-damages verdict of $100 billion could require an appeal bond of $120 billion, prompting speculation about possible tobacco company bankruptcy filings.

Prospects for the bill were uncertain. But Republicans generally have been more sympathetic to the tobacco industry than Democrats, and there are Republican majorities in the Florida Senate and House. Florida Gov. Jeb Bush is also a Republican.