La. State Appeals Court Cuts Award In Tobacco Case

February 9, 2007

A Louisiana state appeal court has cut a jury’s $591 million verdict against tobacco companies by more than half. A plaintiffs’ attorney called the ruling a great victory for smokers because it reaffirms the original verdict, while tobacco companies said they will appeal.

In addition to cutting the damages, the 4th Circuit Court of Appeal also ruled that the plaintiffs cannot collect pretrial interest, which totaled about $400 million, said David Howard, a spokesman for R.J. Reynolds Tobacco Co.

“The effect basically reduced the award from approximately $1 billion to less than $300 million,” Howard said.

He said tobacco companies will ask the Louisiana Supreme Court to overturn the entire verdict against them.

The 51-page decision was the first major development since jurors found in 2004 that tobacco firms had conspired for more than 50 years to distort public knowledge about the effects of smoking.

But there have been numerous interim rulings for the plaintiffs by the 4th Circuit or Louisiana Supreme Court, attorney Russ Herman said.

“Even though the court has reduced the award, we are gratified that the court again – for the seventh time – has said this is a legitimate class action and that the jury and judge were correct in finding the tobacco companies were guilty of intentional fault and fraud,” he said.

The ruling cut the amount of money for stop-smoking programs to $279 million. It also limited the kinds of programs and found that they should be available only to people who smoked before Louisiana’s products liability law was passed in 1988, rather than anyone who started smoking before the suit was filed in 1996.

Howard did not know how many of the original 500,000 plaintiffs that will rule out.

“I don’t know that we looked at specific numbers. Those are things still to be ironed out as the process moves forward. But obviously, it is going to reduce the size of the class,” he said.

Herman said plaintiffs will ask the 4th Circuit to reconsider its conclusion that Louisiana residents who took up smoking after 1988 must sue under the products liability law if they want to collect damages from the tobacco companies.

Still, he said, the decision opens the way for the case to go back to civil court for a judge to administer a trust fund to underwrite a wide array of stop-smoking programs and set up research centers to find new ways to stop smoking.

In a press release, Philip Morris USA said it will aske the Louisiana Supreme Court to review the case and throw out the entire verdict.

“This case involves too many individual issues and should never have been certified as a class action,” said William S. Ohlemeyer, Philip Morris’s vice president and associate general counsel. “We look forward to an opportunity to present these issues to the Louisiana Supreme Court.”

Earlier, Philip Morris attorney Phil Wittmann had said it would not cost nearly $279 million to provide smoking cessation help to the smaller pool of smokers.

“What the opinion finds is that all they’re entitled to is traditional cessation aids such as reimbursement for medication, telephone quit lines and intensive cessation programs” that are medically necessary, Wittmann said.

The ruling rejected other proposed programs approved by the jury, such as $10 million that would have given to community groups to promote quit-smoking programs as “speculative, unsubstantiated and unrelated to the actual treatment of nicotine addiction.”

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