Jury Awards $145 Billion in Landmark Tobacco Case

MIAMI —  The tobacco industry suffered a crushing loss in a landmark class-action case Friday as jurors, who already had found cigarette makers guilty of conspiracy and fraud, ordered them to pay $144.8 billion in punitive damages to Florida smokers who became sick or died as a result of addiction to cigarette smoking.

The stunning verdict in Dade County Circuit Court was several times larger than any previous damage award granted by a U.S. jury. It was immediately hailed by industry foes as a watershed in tobacco control and attacked by the defendants as a travesty that will not withstand appeals.

“I’m very happy,” said plaintiffs lawyer Stanley Rosenblatt, who along with his wife, Susan, filed the case in 1994 and has seen it through a two-year trial that isn’t over yet.

“Justice,” said Frank Amodeo, a throat cancer victim and one of the plaintiffs. “After all these years and so many sick people, justice.”

But tobacco lawyers predicted the verdict will have no practical effect, saying the damages won’t be payable for decades until mini-trials for the hundreds of thousands of class-action members determine who is entitled to a share. Moreover, they said, the entire case is likely to be thrown out on appeal.

Florida law bars damage awards that could bankrupt a business, and Judge Robert P. Kaye could decide to trim the verdict prior to any appeals.

Dan Webb, an attorney for industry leader Philip Morris Cos. Inc., whose punishment was set at $74 billion, said he was disappointed but not surprised by the verdict.

“The deck was truly stacked against us,” Webb said. “The fact that the judge allowed a jury to award such an enormous amount of punitive damages to hundreds of thousands of unidentified . . . smokers, without hearing any evidence whatsoever about the validity of their claims, has never happened before in American history and undoubtedly never will happen again.”

The six-member jury ordered damage payments of $36.3 billion by R.J. Reynolds Tobacco Co.; $17.6 billion by Brown & Williamson Tobacco Corp., $16.3 billion by Lorillard Tobacco Co. and $790 million by Liggett Group Inc., an apportionment that largely reflects market share. Damage awards totaling nearly $1.5 million were entered against two defunct industry organizations: the Tobacco Institute and the Council for Tobacco Research.

“This is a jury who wanted to send a message to these guys,” said Matt Myers, head of the National Center for Tobacco-Free Kids. “The verdict is a clear-cut statement that the jury didn’t buy the industry’s line that they have changed.”

Jurors Took Less Than Five Hours to Decide

But Stephen Gillers, a New York University law professor, called it “inexplicable” and “unacceptable . . . that a six-person state court jury should be able to make a decision that has such a profound impact on the American economy.”

While stating that he favors the use of tort law to punish corporate misconduct, he said the “damages caused by Big Tobacco would be better addressed” by Congress.

The jurors were an assistant principal, a bank teller, a welder, a telephone technician, a postal worker and a head custodian for a public school, according to information provided by the court. Among them were one current smoker and one former smoker, and they range in age from 28 to 49. Four were men and two were women; four were African American, one Latino and one white.

They deliberated less than five hours to reach a verdict and win release from nearly two years of bondage in a case that featured 157 witnesses, thousands of exhibits and more than 55,000 pages of transcript.

Known as the Engle case, the first class-action smokers’ lawsuit ever to come to trial took the name of lead plaintiff Howard Engle, a retired physician who suffers from emphysema.

In their initial verdict in the case last July, jurors ruled that smoking was a cause of 20 different diseases and found that cigarette makers had committed fraud by lying for decades about the risks and addictiveness of smoking.

Then in April, the jury found the industry liable for the cancers of three class representatives, including Amodeo, awarding them compensatory damages totaling $12.7 million and triggering the latest phase, in which the panel had to rule on a lump sum of punitive damages for the entire class, which may number as many as 700,000.

“The truth is out there now,” said Mary Farnan, another of the class representatives, after the Friday verdict. Farnan, who blames the tobacco industry for the cancer that spread from her lungs to her brain, called it “the worst disease in the world. And I can tell you that three times over.”

Rosenblatt praised the jurors after the verdict as “six thoughtful, courageous Americans” who “did the right thing.”

But they did not stick around to discuss their decision, after Kaye urged them not to talk to the press. “What you’ve done here is your own private business,” Kaye said.

‘It’s Up to the Judical System,’ Foreman Says

Jury foreman L. Anthony Finegan said in an interview with The Times that the jury arrived at the $144.8-billion figure by averaging what each of the jurors thought was a figure that would punish Big Tobacco. The numbers ranged from $100 billion to $200 billion.

“You see numbers like that and they are unreal. I’ve never written numbers like that in my life. It was unbelievable,” said Finegan, a 44-year-old Jamaican emigre and grade school assistant principal. “But we were all convinced we did what was necessary for us to do. Now it’s up to the judicial system to ensure that it was not a wasted experience.”

Finegan said he and other jurors had a growing respect and admiration for Rosenblatt, but he said that the verdicts were not based on personal feelings.

In closing arguments earlier this week, Rosenblatt had exhorted the jury to make history by clobbering an industry that he described as the world’s most harmful. “Never have so few caused so much harm to so many for so long, and the day of reckoning has come,” Rosenblatt said.

He called for a punitive award of $123 billion to $196 billion--and suggested $154 billion as a “just” amount. Anything less, he said, “would be a crushing blow to public health in this country.”

Tobacco Called for ‘Financial Reality’

Claiming that the combined net worth of the five companies was just over $15 billion, defense attorneys said no industry--and indeed few countries--could make a lump sum payment of the magnitude the plaintiffs sought.

Rather than punitive damages, Rosenblatt was seeking “a death warrant for each of these five companies,” Webb told the jury.

The verdict must reflect “financial reality, not fantasy,” argued Brown & Williamson attorney Gordon Smith.

The industry contended that punitive damages weren’t warranted in light of steps by the companies to reform their marketing practices, fight underage smoking, develop less hazardous cigarettes and be truthful with the public about the risks of their products. They suggested that if the jury felt obliged to order punitive damages for past misconduct, a total of about $400 million for the companies should be enough.

Accustomed to working in lockstep to defend antitobacco claims, industry lawyers at times seemed like passengers on a shipwreck without enough space in the lifeboats--arguing that their clients deserved special consideration, based on their efforts to reform or delicate financial condition. Speaking of his debt-burdened client, RJR lawyer James Johnson said that “like many individuals, Reynolds lives from paycheck to paycheck.”

But in the end, jurors gave Rosenblatt nearly all that he sought.

Superficially, the judgment pales against industry settlements with the states, which require payments of $246 billion over 25 years, along with billions of dollars more for the fees of private lawyers for the states. However, the settlement payments are being made through price increases on cigarettes sold over the next 25 years, whereas there is no allowance in Friday’s award for paying on the installment plan.

The verdict is the latest, and clearest, barometer of the declining legal fortunes of an industry that, until recently, had achieved nearly legendary success in fending off damage claims. But “their continuing nightmare was a catastrophic loss of the kind that, at the moment at least, has been registered in this particular case,” said Robert Rabin, a Stanford University law professor. Rabin noted that punitive damage awards often get reduced on appeal and that there is a chance of the whole case being reversed.

The award also suggests that the industry’s peace pact with the states may provide little in the way of damage control against future claims. With little effect, industry lawyers told the jury that the companies’ annual payments to the states well exceed their profits, and that their agreement to eliminate tobacco billboards and fight underage smoking was benefiting public health.

In addition to the Engle case, the industry faces a massive Justice Department suit seeking reimbursement of smoking-related health care costs, a string of major lawsuits in federal court in Brooklyn, N.Y., and hundreds of suits by individual smokers in courts throughout the U.S.

Friday’s result can only burnish the Rosenblatts’ image as tobacco killers.

In 1998, tobacco companies agreed to pay a $349-million out-of-court settlement in a class-action case filed by the Rosenblatts on behalf of airline flight attendants claiming illnesses from working in smoky airline cabins.

The settlement was controversial because it provided the Rosenblatts with $49 million in fees and costs, and earmarked $300 million for a new health research foundation, yet flight attendants got nothing except the right to pursue individual claims under more favorable ground rules.

It’s unclear what happens next in the Byzantine Engle case, though that may be clarified Monday when the lawyers meet with Kaye.

One thing seems certain, however: Injured Florida smokers won’t be cashing checks any time soon. And the likelihood of long appeals is just one reason.

In remarks following the verdict, industry lawyers suggested the possibility of a stalemate that will delay the start of appeals, and in the process put the pressure created by the verdict back on the plaintiffs and the court.

Under the law, they said, appeals can’t begin until the trial is over, which can’t happen until compensatory claims of individual class members are resolved. Otherwise, they said, no one will know who is eligible for punitive damages and how to cut the pie.

Given an estimate of 700,000 class members, Webb said it could take 75 years and 100 judges assigned full time to resolve all of the claims.

Kaye may reject the industry’s analysis and issue a final judgment that triggers appeals.

Even so, said Mary Aronson, a legal and financial analyst who tracks tobacco litigation, “It’s going to be a long, long time before anybody sees any money.”

*

Times staff writer Mike Clary contributed to this story.

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The Price to Pay

The awards against tobacco companies in Friday’s verdict:

* Philip Morris Cos. Inc.: $74 billion

* R.J. Reynolds Tobacco Co.: $36.3 billion

* Brown & Williamson Tobacco Corp.: $17.6 billion

* Lorillard Tobacco Co.: $16.3 billion

* Liggett Group Inc.: $790 million

Biggest Civil Verdicts

Friday’s $144.8-billion punitive damages verdict in the Florida tobacco class-action case dwarfs all previous civil damage awards by U.S. juries. Here’s how it compares with the previous largest awards:

*

Damages awarded: $22 billion Reduced to $6 million in 1998

Case: Estate of Ferdinand Marcos

July 1996, Hawaii

Suit brought by U.S. company that claimed the late Philippine president stole a golden Buddha statue filled with gems from a treasure hunter.

*

Damages awarded: $10.5 billion Settled in 1988 for $3 billion

Case: Texaco

November 1985, Texas

Case tried in Texas over interference of Texaco with Pennzoil’s attempted acquisition of Getty Oil.

*

Damages awarded: $5.3 billion Appeals pending

Case: Exxon oil spill

September 1994, Alaska

Fishermen sued over environmental and economic damage from the worst oil spill in U.S. history.

*

Damages awarded: $4.9 billion Award reduced to $1.2 billion; appeal pending

Case: General Motors

July 1999, California

Suit by six people who were severely burned when car’s fuel tank exploded in a rear-end crash.

*

Compiled by SCOTT WILSON/Los Angeles Times

Tobacco Litigation Milestones

1988

* Federal jury awards $400,000 to family of Rose Cipollone, who died of lung cancer. Case argued twice before U.S. Supreme Court, resulting in landmark ruling that federally mandated warning on cigarette packages does not protect tobacco companies from personal injury suits. Sent back for retrial; the suit is dropped in 1992.

*

1994

* Mississippi files first state lawsuit seeking to recoup smokers’ Medicaid bills. Other states soon follow.

*

August 1996

* Florida jury awards $750,000 to plaintiff Grady Carter, ruling against Brown & Williamson. The court overturns verdict; Carter has appealed.

*

1997

* March: Liggett Group settles claims with state attorneys general and agrees to concessions, including turning over secret tobacco documents.

* July: Mississippi settles its pioneering lawsuit against the tobacco industry. In following months companies settle with Florida, Texas and Minnesota for a total of $40 billion for the four states.

*

November 1998

* Forty-six remaining states agree to $206-billion settlement with cigarette makers, bringing total state settlements to $246 billion to be paid over 25 years.

*

1999

* February: San Francisco jury awards Patricia Henley $51.5 million in suit against Philip Morris Cos. Inc. Judge later cuts the award to $26.5 million. Philip Morris is appealing.

* March: Portland, Ore., jury awards $80 million to family of Jesse Williams against Philip Morris. The judge later reduces award to $32 million. The company is appealing.

* September: Federal government sues U.S. tobacco companies seeking to recover billions of dollars spent on smoking-related health care.

*

2000

* March: A San Francisco jury orders Philip Morris and R.J. Reynolds to pay $22 million in damages to plaintiff Leslie Whitely. Both companies are appealing.

* July: The Miami jury in the Engle case orders tobacco companies to pay $144.8 billion in punitive damages to sick Florida smokers.

*

Sources: Times files, Associated Press, Reuters *

Researched by NONA YATES / Los Angeles Times

DOMESTIC TOBACCO REVENUE

*--*

Company* Domestic tobacco revenues Market share Philip Morris Cos. Inc. $19.6 billion 50% R.J. Reynolds Tobacco Co. $7.57 billion 24% Liggett Group Inc. $423 million 1%

*--*

* Defendants Brown & Williamson and Lorillard Tobacco, representing 23% of the market, did not release domestic tobacco revenues.

*

Sources: Associated Press

Researched by: NONA YATES/ Los Angeles Times