Tobacco giants fight $145bn damages ruling

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The Independent US

The massive damages in a Florida tobacco case stirred a wave of anger and excitement in the US yesterday, as the industry's supporters and opponents counted the cost.

The massive damages in a Florida tobacco case stirred a wave of anger and excitement in the US yesterday, as the industry's supporters and opponents counted the cost.

A jury ruled on Friday that tobacco companies must pay $145bn (£98bn) in damages to sick smokers. The decision will be tied up in the appeals process for years, and the outcome is still very uncertain. But if it stands, the Engle case will trigger many millions more claims for damages, ending the tobacco industry.

Big business, predictably enough, rallied around the tobacco industry. The US Chamber of Commerce called the decision "an obscene symptom of a court system that is out of control". And the analysts for stockbrokers who invest in tobacco companies, all of whom have a vested interest in the success of the stocks, said that there was no reason to worry. If there were no tobacco companies there would be no tobacco analysts.

The appeals will be based partly on what the tobacco companies consider to be excessive damages. Philip Morris and the other four companies said they could afford only $150m to $375m in damages. The other defendants are RJ Reynolds Tobacco Co, Brown & Williamson Tobacco Corp, which is owned by British American Tobacco, Lorillard Tobacco Co, Liggett Group Inc, and two, now defunct, industry groups, the Council for Tobacco Research and the Tobacco Institute.

The companies will also seek to challenge whether or not the case should have been a class action, allowing many thousands to participate in one case. It is still unsure how many Floridians will join the class, although lawyers for the plaintiffs estimate that there are some 500,000 to 700,000 ill smokers in the state. Some have smoked for longer than others and they have different diseases, the tobacco companies argue. And they will contend that, procedurally, individual trials to decide compensatory damages should have been held before punitive damages had been decided.

America's tobacco-producing states were aghast at the verdict, which could spell disaster for some regional economies. "North Carolina's troubled tobacco industry, declining even before Friday's verdict, will likely shrink even faster now," wrote the Charlotte Observer. "The question is how fast."

There are more than 12,000 tobacco farmers in North Carolina and another 13,000 people working for the cigarette manufacturers.

Cigarette consumption in the US has been declining for 20 years. Seeking new markets and new sources of profit, US tobacco companies went in search of exports, but for the past four years these too have been in decline. The companies are now seeking to diversify out of what seems like a dying and financially dangerous industry.

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