Ex-Smoker Wins Against Philip Morris

By Duff Wilson, NY Times Published: November 20, 2009      Legal experts predict that thousands of tobacco lawsuits could gain momentum in Florida after a Fort Lauderdale jury ordered Philip Morris USA to pay $300 million to a former smoker who says she needs a lung transplant.    If it survives an appeal, the verdict late Thursday would be the nation’s largest award of damages to an individual suing a tobacco company and could encourage thousands of plaintiffs who have filed similar cases in Florida, according to Clifford E. Douglas of the University of Michigan Tobacco Research Network.   A state supreme court ruling in Florida a few years ago made it easier to pursue tobacco lawsuits there than in other states. But the tobacco industry, which plans to appeal, appeared unfazed. Tobacco companies have considered product liability suits as little more than a cost of doing business since the seven biggest companies agreed to pay $206 billion in a master settlement agreement with 46 states in 1998.   Florida, despite being one of those states, had a major legal ruling in 2006 that lowered a plaintiff’s burden of proof against a tobacco company.   The Florida Supreme Court rejected a class-action verdict and a $145 billion award to plaintiffs, saying smokers would have to sue individually. But the court said plaintiffs would not have to prove some key elements that had been upheld in the first stage of the class action: that nicotine is addictive, that smoking causes diseases, and that cigarette companies fraudulently hid those facts.   “That makes these cases in Florida unique,” Mr. Douglas said. Smokers in other states are still suing cigarette makers, he said, but they have higher legal hurdles.   A spokesman for the Altria Group, the Virginia-based parent company of Philip Morris USA, indicated it would appeal the verdict and said the Florida rules were “fundamentally unfair and unconstitutional.”   Shares of Altria, which had been up more than 27 percent this year, dropped 1.2 percent Friday, to $18.98.   Lucinda Naugle, the 61-year-old sister of a former Fort Lauderdale mayor, was awarded $56 million in compensatory damages and $244 million in punitive damages Thursday after a three-week trial and three hours of jury deliberation in Broward County Circuit Court.   Ms. Naugle, an office manager, had started smoking when she was 20 and quit when she was 45 years old, her lawyer, Robert W. Kelley of Fort Lauderdale, said in a telephone interview Friday. She now has severe emphysema and needs a lung transplant she cannot afford, he said.   The jury assigned her 10 percent of the liability for her smoking and disease, and Philip Morris 90 percent.   “She’ll get paid, I would hope, within a year or two,” Mr. Kelley said. “The question is will she live long enough.”   Mr. Kelley said about 25 more cases were lined up for trial in Florida next year. In all, more than 9,000 people from the former class action filed individual suits in various courts in Florida against tobacco makers by January 2008, the deadline set by the state Supreme Court.   About 4,000 of those cases were filed in federal court and have been stayed, pending a review scheduled in January by the United States Court of Appeals for the 11th Circuit, in Atlanta.   Brendan J. McCormick, a spokesman for Altria, said Friday that the company expected the federal appellate court to reject the standards of proof set by the state Supreme Court. “What you have is a defined number of cases in Florida with unique issues that will ultimately be resolved on appeal,” he said.   David J. Adelman, a tobacco analyst for Morgan Stanley, said the Florida case and, separately, forthcoming class-action lawsuits over light cigarette claims pose an “undeniable” increase in the industry’s legal risk “which had previously declined to an unprecedented low point.”   In an interview, Mr. Adelman noted that there were no jury trials in cigarette cases all of last year, and that other states had decertified class-action suits in ways more favorable to the tobacco industry. Further, Mr. Adelman said, the major legal threats to the industry were removed by the 1998 settlement with states. And since then, the industry has fended off calls in court and Congress for a huge disgorgement of its profits.   Even in light of the Florida verdict, Mr. Adelman said the tobacco industry could afford several hundred million dollars a year in legal losses if it had to. “That is a financially manageable issue,” he said.   Of more concern, he said in the interview and a note to investors, is a coming round of cases claiming fraud and damages from past marketing of so-called light cigarettes.   Those products have been shown to be no less harmful than regular cigarettes because smokers inhale them more deeply. Congress, in landmark tobacco legislation earlier this year, prohibited the use of the terms “light,” “low” or “mild” in all cigarette labeling and marketing, effective June 22, 2010.   The first of the “light cigarette” class-action cases is scheduled in Minnesota next October, followed by Missouri in January 2011.