Miami, May 21 (Reuters): A Florida appeals court today reversed a landmark $145 billion judgment against major US tobacco companies, in a resounding victory for the tobacco industry.
The ruling knocked down a July 2000 jury verdict that held the five biggest US cigarette companies liable for the illnesses of an estimated 700,000 Florida smokers. In the case brought by Miami Beach pediatrician Howard Engle, who blamed smoking for his emphysema, the trial jury had found the companies guilty of negligence, fraud and conspiracy. It ordered them to pay $145 billion in damages for misleading Americans about the risks of smoking.
But the Florida third district court of appeal, in a ruling issued on its website, said the legal proceedings that produced the massive award were “irretrievably tainted” and the award could violate Florida law by bankrupting the companies.
“The fate of an entire industry and of close to a million Florida residents cannot rest upon such a fundamentally unfair proceeding,” the court ruled.
The court decertified the massive class of sick smokers in the case, saying they had failed to meet the requirements of a class action.
It said any members of the the class whose claims have not yet been tried should be able to proceed individually.
The defendants included the number one US cigarette maker, Philip Morris USA, a unit of Altria Group Inc, along with R.J. Reynolds Tobacco Holdings Inc. , Lorillard Tobacco Co., a unit of Loews Corp; the Brown & Williamson unit of British American Tobacco Plc BATS., and Vector Group’s Liggett.
Shares of the cigarette makers jumped on the news.
David Adelman, a tobacco analyst at Morgan Stanley, said the ruling marked the end of tobacco class-action lawsuits.
“This is the best possible outcome for the industry and it fundamentally reduces its legal risk in a way very few things could,” he said.
“The albatross around the industry’s neck has been removed. It signals the end of class actions.”
Class-action suits expand exponentially the number of plaintiffs and damages in a lawsuit by allowing initial plaintiffs to plea on behalf of a far larger group with common interest.