The award, granted by a jury in the San Francisco County Superior Court, was three times higher than the amount being sought by the plaintiff's lawyers and more than 25 times higher than any previous punitive damages inflicted on a tobacco company. With hundreds of similar lawsuits pending around the country and hundreds more expected after Wednesday's decision, the tobacco companies now risk being deluged in expensive and potentially crippling litigation.
"This certainly confirms the industry's worst nightmare," said Robert Rabin, a law professor at Stanford University. Shares in all of America's big tobacco companies took a beating on Wall Street, with Philip Morris dipping in early trading. The company's value has fallen by 30 per cent since last summer.
The California suit was brought by Patricia Henley, a 52-year-old businesswoman from Los Angeles, who smoked for more than 30 years before being diagnosed with lung cancer two years ago. She said she had genuinely believed assurances by tobacco companies that there was no proven link between smoking and lung cancer and realised too late, in 1994, that she had been misled. In addition to the $50m in punitive damages, she was awarded $1.5m to compensate her for medical bills and curtailment of life expectancy.
Her lawyer, a well-known anti-tobacco advocate called Madelyn Chaber, presented more than 1,000 company documents seeking to minimise or deny the damage that smoking can cause. These included an infamous "frank statement" posted in newspaper advertisements in 1953 in which the main companies pledged to investigate health concerns surrounding smoking.
"Our decision was based on a lot of evidence, the suppression of known facts by Philip Morris. They had a lot of information they just didn't give out. This jury really as a whole was very angry at the cigarette companies," the jury foreman, George Loudis, a non-smoker, said after the award was announced.
Lawyers for Philip Morris said the decision was motivated more by emotion than legal good sense and vowed to appeal. "The punitive damage award of $50m is so absurd and grossly disproportionate to the compensatory damage award of $1.5m as to clearly show passion and prejudice on the part of the jury," said Gregory Little, Philip Morris's associate general counsel.
Legal experts believe Philip Morris may succeed in reducing the damages but is unlikely to have them waived altogether - opening the floodgates for other cancer victims to make similar claims.
Ms Henley, whose cancer is in remission after a bout of chemotherapy, was elated by the court decision and said she would donate the money to educational programmes to deter children from smoking. "I don't touch blood money," she said. "It was a great jury and it took a brave jury to make this decision."
With tobacco companies under increasing commercial and legal pressure in the United States, they have sought one-off settlements to ward off precisely this sort of litigation. Last November, they agreed to pay $206bn to 46 of the 50 American states to avoid being sued for the medical costs of treating smokers.
Lawsuits by individuals have been relatively rare. California actually banned such actions for 10 years but repealed the ban in 1997. At the same time, the state also outlawed smoking in all public places including restaurants and bars.