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A Florida appeals court last week shredded the enormous $145-billion judgment from 2000 against the tobacco industry. With the largest civil judgment in U.S. history now gone in a puff of smoke, cigarettemakers are feeling their oats.
There's even a rumor the emboldened industry will lobby to get a new health warning, one of its own liking, on cigarette packages and in advertisements. Instead of the now-familiar SURGEON GENERAL'S WARNING: Smoking causes lung cancer, heart disease and emphysema and may complicate pregnancy, here's what the feisty tobacco industry wants to appear:
CIGARETTE INDUSTRY'S WARNING: Can't stop smoking? So sue us. We'll kick your butt!
Okay, I'm kidding about the warning. But one has to wonder at the tobacco world's remarkable reversal of fortune last week. Florida's 3rd District Court of Appeal threw out the record $145-billion punitive damage judgment of July 14, 2000, after deciding a Miami judge never should have allowed a group as vast as 500,000-plus Florida smokers to present their complaints at trial in one class action lawsuit.
In the long and grinding tobacco war, chalk up this major battle as a win for the country's biggest cigarettemakers: Philip Morris, R.J. Reynolds, Lorillard, Brown & Williamson and Brooke Group Ltd.
In a case of strange bedfellows, other winners in the voiding of the $145-billion judgment are 46 U.S. states. The state governments (Florida not among them) sued the major tobacco companies to seek compensation for the rising costs of health care to cope with smoking ills. The 46 states settled the suit after the tobacco companies promised to pay $246-billion over 25 years.
That's critical money for many budget-strapped states. Because those funds were endangered by Florida's $145-billion judgment, a sum potentially big enough to bankrupt the industry, 46 states today find they are unwitting but devoted supporters of the tobacco industry.
A similar tale took place in March when Philip Morris USA was told to post a $12-billion bond in order to appeal a $10.1-billion consumer-fraud verdict issued by an Illinois state judge. The company, which the judge said had deceived smokers into thinking its low tar and nicotine cigarettes were safer to smoke than regular cigarettes, said it would go bankrupt if it had to post such a huge bond.
Enter tobacco's new buddies. Attorneys general from 37 states and U.S. territories asked the Illinois judge to reduce the $12-billion bond Philip Morris had to post, saying it could jeopardize their payments under a national settlement with tobacco companies.
How twisted. The complexities of just who is on what side for which reason in this high-priced tobacco game could drive some poor souls to smoke.
Which brings us to Angie Della Vecchia of Pasco County.
In the mid-1990s, Judge Robert Kaye in Miami first allowed sick Florida smokers and the survivors of those who died - a single class action of more than 500,000 people - to put tobacco companies on trial. Then he held individual trials for three class members said to be typical of the rest.
That's when jurors heard about the Florida life stories and the ordeals by cancer of 44-year-old nurse Mary Farnan of Inglis; 60-year-old clockmaker Frank Amodeo of Orlando; and 53-year-old homemaker Angie Della Vecchia of New Port Richey.
The jury awarded a total of $12.7-million in actual damages to the three. Then in July 2000, the same jury hit the tobacco industry with the $145-billion verdict as punishment for its behavior against the whole class.
Della Vecchia died in 1999 after cancer spread from her lungs to other organs and, finally, to her brain. Her death occurred just three weeks after the initial verdict.
Both Della Vecchia and Farnan started smoking at 11. Della Vecchia smoked for 40 years and Farnan for 29. Amodeo started smoking at 14 and kept it up for 34 years. The jury awarded Farnan $2.85-million and the estate of Della Vecchia $4-million. The jury also awarded $5.8-million to Amodeo.
But following last week's appeals court ruling, all three awards are up in the air. None of the claims from the three are legitimate, the appeals court ruled, because none of them fit into time limits required by law or by the definition of the class itself.
Amodeo, now 64, has survived head, neck and larynx cancer. A former professional singer, he has been unable to swallow for 16 years.
Farnan, 47 and a former nurse, has endured chemotherapy, radiation, two operations for lung cancer and one for brain cancer. She can no longer work.
Della Vecchia's widower, bagel shop manager Ralph Della Vecchia, met his future wife at the 1964 World's Fair in Queens, N.Y. He worked at the Red Garter saloon in the Wisconsin pavilion. In 2000, he told the St. Petersburg Times that his wife would have been "ecstatic" over the jaw-dropping $145-billion judgment. Last week, the 67-year-old New Port Richey resident was more somber.
In its May 21 ruling, the appeals court reversed the jury verdict in 2000 that had ordered the cigarette companies to pay $145-billion nearly 500,000 Florida smokers for misleading them about smoking's risks. The three-judge appeals court reasoned that the case was tainted by plaintiffs' lawyer Stanley Rosenblatt's misconduct, that the huge award was unfair in size and that the award could bankrupt the defendant tobacco companies. That's not allowed under Florida law.
In an often sharply worded, 68-page ruling, the judges condemned the "astronomical" verdict as the work of a "runaway" jury that had been "swept along in lemming-like fashion" by improper arguments.
And the appeals court came to a rather surprising conclusion. It said that a 1997 settlement between Florida's state government and the tobacco industry somehow barred punitive damage awards against tobacco companies in any future Florida proceeding.
The appeals court ruling not only threw out the 2000 jury award but also dismantled the case's class action status. That means Florida smokers now will have to bring individual cases against the tobacco industry. Talk about clogging up the courts.
For obvious reasons - a smoker's health, the deep pockets of the tobacco industry and sheer time - many of these suits will never materialize.
Of course, there is still a higher authority than a Florida appeals court. An appeal of this case to the Florida Supreme Court looks likely.
But legal momentum is shifting to the tobacco business. "Last week's ruling and future verdicts in favor of the tobacco industry may deter further class actions and weaken plaintiff arguments in pending cases," Standard & Poor's analyst Howard Choe writes.
Smith Barney analyst Bonnie Herzog calls the Florida appeals court decision a "slam dunk" for the tobacco industry.
We'll see. Almost 6,000 kids try smoking for the first time each day. Another 3,000 kids become regular daily smokers. Somebody will have to pay some big bucks to take care of many of them when they are older.
- Robert Trigaux can be reached at trigaux@sptimes.com or (727) 893-8405.