Big Tobacco optimistic despite landmark $145 billion verdict

MIAMI -- Hit with the biggest jury verdict in U.S. history, the nation's top five cigarette makers remained hopeful they won't have to pay the full amount of the staggering $145 billion penalty to sick Florida smokers.

''There's probably not a country in the world that can withstand a verdict this size,'' said Philip Morris Inc. attorney Dan Webb, whose company on Friday was ordered to pay $73.96 billion. Defendants were confident that either the judge will gut the award or the entire case will be overturned on appeal.

Jurors took less than five hours to reach the decision following a two-year class-action trial covering 300,000 to 700,000 smokers.

They also ordered R.J. Reynolds to pay $36.28 billion, Brown & Williamson $17.59 billion, Lorillard Tobacco $16.25 billion, and Liggett Group Inc. $790 million.

''Finally they got tagged. Finally they got hit. The day of reckoning was delayed in coming and they should just take it,'' said smokers' attorney Stanley Rosenblatt, who hugged several clients after the verdict was read.

''This was never only about money. This was about showing these companies up for what they really are.''

Tobacco lawyers had said they could afford $150 million to $375 million, but the companies would be put out of business if the award went much higher. Under Florida law, a punitive verdict cannot bankrupt a defendant.

''It was a fatally flawed process. This whole trial was,'' said Don Donahue, a Reynolds senior vice president. He said there is ''no way'' the verdict will be upheld on appeal.

It was the third time the jury has deliberated in the case, the first smokers' class-action lawsuit to go to trial. The panel decided in July 1999 that the industry makes a deadly product. In April, the jury ordered the industry to pay $12.7 million in compensatory damages to three smokers representing the class.

The smokers had wanted the tobacco companies to pay $196 billion as punishment for making a product that kills 430,000 Americans a year and for misleading the public since the 1950s, when internal research concluded smoking causes cancer.

Top executives from all five defendants made unusual appearances to testify they didn't deserve to be punished because they have changed their ways and are already committed to paying billions of dollars to settle the lawsuits brought by the states.

''This historic verdict sends a powerful signal that Big Tobacco will be held accountable for the addiction and disease it causes every day, and that it will pay for continuing to lure children into its death trap,'' said Connecticut Attorney General Richard Blumenthal, an outspoken industry critic.

Meanwhile, the Southeast Iron Workers health insurance plan filed paperwork with the court Friday asking that it, other unions and health insurers be allowed to receive a portion of any tobacco company payout because they have spent millions to treat ill smokers.

''There are a lot of other funds and insurers who paid and continue to pay for (the ill smokers') health care,'' union attorney Lisa Lehner said.

Stock prices of the five companies were down moderately following the ruling.

Mary Farnan, one of three Florida smokers representing the entire class during the trial, called the verdict ''absolute justice.''

''I'm sincerely happy for all of these people,'' said the north Florida nurse who contracted lung and brain cancer after smoking for 29 years.

Frank Amodeo, another representative, said he hopes the decision will stop the tobacco companies from marketing cigarettes as if they are safe. The Orlando clock maker contracted throat cancer about 10 years ago after decades of smoking. He cannot swallow and must be fed through a tube.

''There is no amount of money in the world that will change the way I eat,'' Amodeo said.

The third representative, Angie Della Vecchia, died last year of lung cancer after smoking for 40 years.

Nationwide, juries have awarded damages to individual smokers only six times. Three verdicts were overturned, two are on appeal, and one was returned in March with $1.72 million in compensatory damages. The industry has yet to pay anything except for the national settlement and a secondhand smoker settlement.

Friday's award is the largest ever, far surpassing the $22 billion awarded in Hawaii in 1996 to a treasure hunter who sued the estate of former Philippines President Ferdinand Marcos for the alleged theft of gold bullion. That verdict was later overturned.

The largest previous punitive-damage award was $5 billion against ExxonMobil for the Exxon Valdez oil spill in Alaska. The company is appealing. The previous record for punitive damages in a product-liability case was $4.8 billion against General Motors last year in a California car fire. A judge slashed the award to $1.09 billion.

The U.S. Chamber of Commerce called Friday's decision ''an obscene symptom of a court system that is out of control.''

''Trial lawyers have subverted the legal system for their own financial gain,'' said Bruce Josten, Chamber executive vice president. ''Legitimate but politically out-of-favor businesses have been attacked by attorneys driven by the prospect of absurd punitive damage awards.''

But smokers' witness Joe Cherner, a former Wall Street trader who founded Smokefree Educational Services 10 years ago, said the industry can collect the award by charging addicted smokers more on cigarettes.

''What is unique and difficult to understand is that this industry may be the only one in America that can afford to pay more that its net worth,'' he said.

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