Author: By Rupert Cornwell in Washington
Cindy Naugle, a 61-year-old garage office manager in Fort Lauderdale who suffers from emphysema, was awarded $56m in compensatory damages plus $244m in punitive damages. Philip Morris has been ordered to pay the entire punitive part of the verdict, and 90 per cent of the compensatory damages, after the Broward Circuit Court jury decided that Ms Naugle had been 10 per cent responsible for her predicament.
Ms Naugle’s lawyers successfully argued that Philip Morris had been guilty of fraud, concealing what it knew full well, that smoking cigarettes was addictive and damaging to the health. Ms Naugle had been smoking her favourite brand of Benson & Hedges – marketed as making women look more feminine and sophisticated, her lawyer said ? since 1968, when she was 20 years old, in the belief that she would look more grown-up.
Florida tobacco litigation began in 1994 as a class-action lawsuit, in which the BAT subsidiary Brown & Williamson, Lorillard and RJ Reynolds were named as well as Philip Morris. It covered a possible 700,000 Florida smokers. The suit resulted in actual damages for three plaintiffs and a $145bn pool, but the verdict along with the original class-action suit were thrown out on appeal. Instead, potential beneficiaries were allowed to press ahead on an individual basis, and use findings established in the original trial. Some 3,000 such lawsuits are going forward.
In a statement, Philip Morris indicated it would fight the judgment. The jury in the Naugle case had been wrongly allowed to rely on findings by an earlier one, while the judge in the case had made “numerous erroneous rulings,” it said. The punitive damages in particular were “grossly excessive,” and a violation of the constitution.
Whatever happens, however, the immediate outcome is another setback for the tobacco industry, which has now lost eight out of 10 individual cases that have come to trial, in some instances after rejecting settlement offers of as little as $10,000. A further 50 trials are already set for 2010.
If the award to Ms Naugle is massive, it nonetheless pales beside the $3bn of punitive damages originally handed down by a California court in 2001 against Philip Morris, in the case of a Richard Boeker. On appeal the sum was reduced to $100m, but both sides appealed again, and Mr Boeker died in 2002. In the end, the company reportedly paid $82.5m.
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