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Last Updated: Jan 31st, 2007 - 10:58:43 |
Smokers of light cigarettes given green light to sue
Sep 26, 2006, 16:09
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A judge in America has given the go ahead to a class-action lawsuit accusing the tobacco industry of misleading smokers into buying light cigarettes as a less harmful alternative to regular ones.Judge Jack Weinstein of US District Court in Brooklyn, New York, said that there was enough evidence for the plaintiffs to push their case as a class-action, potentially enabling tens of millions of smokers to join the lawsuit, which it is estimated could cost tobacco firms between $100 billion and $200 billion in damages.The companies affected include RJ Reynolds Tobacco, British American Tobacco and Philip Morris USA, maker of Marlboro cigarettes. Philip Morris and RJ Reynolds said they would appeal the judge’s decision.After the ruling, shares in the tobacco industry sunk on Wall Street.The plaintiffs are seeking damages from what they claim was a conspiracy dating back from 1971, when Philip Morris began selling Marlboro Lights, to make it appear that "light" or low-tar cigarettes are safer even though their internal documents showed they knew the risks were about the same. Unlike several previous lawsuits, it does not argue that smokers suffered personal injury – rather, that they were duped by the tobacco industry. "The industry’s goal was not to develop less harmful cigarettes, but to develop cigarettes that would be perceived as less harmful," said the suit, which was first filed in 2004. Judge Weinstein said that there was "considerable merit" to the allegation that most smokers would not have purchased light cigarettes "if they knew they provided no health advantage over regular cigarettes" and ordered that a jury should decide on the case. He said that group action was necessary because no individual smoker would be able to afford to prosecute the alone. Yesterday’s ruling opens the door to a potentially massive judgment against cigarette makers, which up to now have managed to avoid handing out significant damage awards. "If, as contended by plaintiffs, a huge fraud was perpetrated on tens of millions of people causing them billions of dollars in loss ... recovery dependent on proof should be allowed," Judge Weinstein wrote in his ruling. "Essentially, the issue before the court is not whether a fraud case be proven, but whether damages can be proven for the period since each smoker started smoking, failed to stop, switched to, or started with "lights" rather than the standard cigarettes in vogue up to the introduction of "lights" on a large scale. "Michael Hausfeld, a lawyer for the plaintiffs, said that as many as 50 million Americans could join in the claim for damages. "It’s an extremely significant ruling," he said.The tobacco companies had argued in their defence that the lawsuit relied on flawed data, and without examining each smoker, it was impossible to know their specific motives for purchasing light cigarettes. They said that the evidence showed that the term "lights" was intended to refer to a lighter-tasting cigarette and that many consumers understood this. William Ohlemeyer, general counsel for Philip Morris USA, the largest American cigarette manufacturer, said that the ruling went against "the overwhelming weight of federal and state case law regarding class actions in smokers litigation". He added: "This case involves smokers who are not seeking to recover for personal injuries, who continue to smoke light cigarettes and who paid no more for Marlboro Lights cigarettes than they would have paid for regular Marlboros." Altria Group Inc, the parent company of Philip Morris USA, said that the ruling would delay its long-awaited restructuring plan, including a spin off its Kraft Foods unit. Richard Jahnke, analyst at Briefing.com said the ruling was disappointing for major tobacco companies and that the lawsuit posed "one of the last large legal hurdles facing the industry"."This presents a considerable overhang for the industry, and could have specific implications for Altria Group’s restructuring plans. "The 540-page ruling was greeted with surprise by many analysts and investors. "I think a lot of people weren’t expecting this, because the judge a few weeks ago questioned whether the smokers could prove the damages," said Charles Norton, co-portfolio manager of the Vice Fund, which holds 36,000 Altria shares. The judgment comes in the wake of a number of rulings favourable to cigarette makers. Tobacco firms recently won a major victory in a US government lawsuit when a federal judge in Washington ruled that even though the companies may have misled smokers, they could not be held liable for punitive damages. In another major case, Florida’s Supreme Court threw out a landmark $145 billion punitive damage award against cigarette manufacturers by hundreds of thousands of smokers in July, calling it "excessive as a matter of law."
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