Tobacco lawsuit rejected by court

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The Independent Online
The tobacco industry yesterday scored a signal victory in its battle to avoid paying billions of dollars in medical damages, when an appeals judge threw out a massive class-action lawsuit filed on behalf of millions of smokers.

The lawsuit, known as the Castano case, had been by far the largest legal threat against the cigarette makers, who in recent months have been forced to fend off a barrage of legal and regulatory challenges.

News of the decision, which came towards the end of market trading in New York, sent tobacco stocks soaring. Shares in Philip Morris leapt almost seven points to $104, RJR Nabisco over $2 and shares in BAT also gained a point.

The lift in BAT shares came in spite of the announcement only minutes earlier that charges were being filed by a federal grand jury against former and current executives of Brown & Williamson, a BAT subsidiary, for allegedly smuggling cigarettes into Canada to avoid high Canadian duties.

A three-judge panel in New Orleans that had been considering the Castano suit agreed with lawyers for the tobacco companies that a class-action lawsuit on behalf of smokers across the United States would be too unwieldy in court. The panel thus decertified it as a class-action suit.

Under the suit, first lodged in 1994 and given class-action status a year later, the plaintiffs allege that the tobacco industry knowingly manipulated nicotine levels in cigarettes to ensure maximum rates of addiction and withheld information that would have exposed the addictive nature of nicotine.

Had the suit gone forward and ended with a finding against the companies, it could have cost them many billions of dollars in damages. The defendants included Philip Morris, RJR Nabisco, United States Tobacco and Brown & Williamson.

In March, the Liggett group, owned by Bennett LeBow, broke ranks with the rest of the industry by settling its part in the suit and promising to contribute a part of its future profits to anti-smoking campaigns.

Lawyers for the plaintiffs have the choice either to seek an appeal against yesterday's ruling or simply to pursue the case on behalf of the original plaintiffs, who are three smokers and Dianne Castano, whose husband died of lung cancer.

The Clinton administration is still seeking to subject tobacco products to regulation and several individual states are suing the companies to recover costs for smoking-related health care.