Tobacco claim is slashed to $100m

The tobacco industry breathed a sigh of relief yesterday after a California judge slashed a $3bn (£2.1bn) damages award against Philip Morris to $100m in a claim filed by a smoker who is dying from lung cancer.

Judge Charles McCoy, of the Los Angeles Superior Court, said that the original damages verdict against the company was too high, setting an unfair precedent for future claims.

The move was seen as a victory for Philip Morris, which owns cigarette brands such as Marlboro and Players. It said it would appeal, requesting a "complete reversal and retrial" on multiple grounds.

Shares in the company rose modestly although the outcome was what the industry had expected. British American Tobacco, the London-listed owner of cigarette brands including Dunhill and Lucky Strike, finished the day up 2.5p to 557.5p.

Andrew Darke, an analyst at Williams de Broe, said: "This is just part one of the process. It's all been seen before and it's a bit of a non-event. You're only part way through a process which history suggests will cut the award and maybe reverse the decision completely.

"Virtually all of the personal liability cases in the States have ended up with the tobacco companies reversing the decisions. Legal awards in the States are pretty frequent these days and it's part and parcel of doing business there."

Nevertheless, tobacco stocks including BAT were hit in June when Richard Boeken, the plaintiff in the case against Philip Morris, was awarded $5.54m in compensation and $3bn in punitive damages.

His lawyer said that no decision had been made on whether or not to accept the reduced damages on offer.

Mr Boeken, who suffers from lung cancer that has spread to other parts of his body, smoked for 40 years before being diagnosed with the disease two years ago.