- The Washington Times - Wednesday, May 21, 2003

MIAMI — A Florida appeals court erased a record $145 billion award against the tobacco industry yesterday, ruling that thousands of Florida smokers could not group themselves together for a class-action attack on cigarette makers.

The action came on the same day that more than 190 countries approved the first international treaty against smoking, including an advertising ban, aimed at kicking the global habit that kills nearly 5 million people a year.

Tobacco-company stock prices jumped on news that the 68-page order by a three-judge panel of the 3rd District Court of Appeal in Miami found several flaws in the largest punitive-damage verdict in U.S. history and the two-year trial that produced it.

R.J. Reynolds Tobacco, the nation’s second-largest cigarette company with brands such as Winston and Camel, issued a statement calling the ruling “a major victory for the tobacco industry.”

“Tobacco couldn’t have wished for a more positive decision,” said Martin Feldman, tobacco analyst at Merrill Lynch.

But Mark Gottlieb, a lawyer with the antismoking Tobacco Products Liability Project at Northeastern University’s law school, called the decision “a terrible blow” to Florida’s sick smokers.

Margaret Amodeo, whose husband, Frank, lost his $5.8 million compensatory damage award for throat cancer under the ruling, said they were disappointed. The decision discarded two other individual awards as well.

Janine Goluba, whose late mother had won a $3.5 million award, said the decision was “beyond my comprehension. … Lie, cheat, deceive and still be able to be on top.”

A six-member Miami jury decided almost three years ago that cigarettes are deadly, addictive and defective because they make people sick when used as directed. It set punitive damages for an estimated 300,000 to 700,000 smokers after deciding compensatory damages for Mr. Amodeo and two other cancer sufferers who served as representatives of the group.

But the appeals court agreed with the tobacco industry that the class was unmanageable, found the award would have violated state law by bankrupting the companies, called the trial plan unconstitutional and chided the smokers’ attorney, Stanley Rosenblatt, for making racially charged appeals to four black jurors. He had made references to the Holocaust and slavery while discussing the sale of cigarettes.

Mr. Rosenblatt and his wife, Susan, who also represented the smokers, could not be reached for comment. They have the option of asking the full appeals court to review the case.

The court said that although cigarette makers were accused of similar fraudulent conduct, there are enough differences among smokers’ cases that they shouldn’t be allowed to sue together. The court called its conclusion “inescapable.”

William S. Ohlemeyer, vice president of Philip Morris USA, the maker of industry-leading Marlboro, said the ruling “is in line with the country’s legal mainstream.”

Other tobacco companies agreed.

“This decision clearly shows we were right,” said Mark Smith, a spokesman for Brown & Williamson Tobacco, whose cigarette brands include Kool, Pall Mall and Lucky Strike.

“We feel that we’ve been completely vindicated in every respect,” said Ronald Milstein, vice president and general counsel of Loews’ Lorillard Tobacco, maker of brands Kent and Newport.

In trading on the New York Stock Exchange, shares of Philip Morris parent Altria Group rose $3.39, or 9.7 percent, to close at $38.30; R.J. Reynolds gained $1.57, or 5 percent, to $33.28; and Loews rose $1.82, or 4.3 percent, to $44.10.

Mr. Gottlieb, of Northeast University, called the decision surprising because the same court created the class in 1996 and refused once before to reconsider its decision. In the meantime, many other courts nationally have denied class-action status for smokers.

Even with the victory, Liggett Tobacco, Philip Morris and Lorillard are out $710 million. After the trial, the three companies have agreed to pay that nonrefundable amount to keep Florida smokers from challenging the constitutionality of a new state law on appeal bonds enacted during the case. No structure has been created for distribution of the money.

“At the time, it made sense for us,” Mr. Ohlemeyer said. “It demonstrates how important it was for us to get to the appellate court.”

When the appellate process ends, the industry will get back another $1.2 billion deposited with the court to appeal, a tiny fraction of what it would have been required to pay without a change in the law.

The major tobacco companies settled state lawsuits for smoking-related health care costs in 1998 for a total of $246 billion.

In October, a Los Angeles jury ruled that Philip Morris USA should pay $28 billion to a 45-year smoker with lung cancer, but a judge reduced it to $28 million. Cigarette makers face more than 1,000 lawsuits by individual smokers.

Meanwhile, the World Health Assembly, the annual meeting of the World Health Organization’s 192 countries, yesterday unanimously adopted the Framework Convention on Tobacco Control that commits them to fighting the “devastating … consequences of tobacco consumption and exposure.”

“Today, we are acting to save billions of lives and protect people’s health for generations to come. This is a historic moment,” said WHO Director General Gro Harlem Brundtland, who made the antismoking drive the top priority of her five-year tenure.

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