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Back to reality

The Florida Supreme Court charted a sensible middle course in tossing out punitive damages against the tobacco companies.

Published July 8, 2006

By tossing out a $145-billion punitive damage award against the nation's tobacco companies, the Florida Supreme Court set a number of things right.

The court ruling will be a caution for plaintiff's lawyers who have pushed to enlarge the size of class action lawsuits to stratospheric levels in search of a huge payday. The court subtly directed trial courts to better police these suits; and it warned that excessive punitive damage awards that have little relationship to the economic harm caused and are likely to bankrupt the companies being sued will not be tolerated.

The ruling protects the solvency of the nation's tobacco companies and leaves them able to continue paying the settlement reached in the 1990s with Florida and other states that sought to recoup the cost of treating smoking-related ailments. Under the agreement, Florida will receive about $11-billion over 24 years. It is money the state has come to rely upon, having used it over the years to pay for an antismoking education campaign, children's health insurance and other state needs.

While probusiness types might be disappointed that the court refused to toss out the class-action suit entirely, and trial lawyers might be angered by newly established limits on class actions and punitive damages, the ruling charts a sensible middle path.

Engle vs. Liggett Group Inc. is the kind of lawsuit that has turned public opinion against trial lawyers and their greed. Initially, plaintiff's lawyers sued the nation's tobacco companies on behalf of all smokers nationwide who sustained smoking-related injuries. But the class was reduced on appeal to injured smokers and their heirs in Florida only. Even so, the size of the class is estimated at 700,000.

The court sensibly recognized that these class members are not uniform and each has a unique health history with ailments that may or may not have been related to their smoking addiction. In light of these differences, the court directed that individual recoveries would have to be separately litigated, giving smokers about a year to file suit.

But rather than make each one start from scratch, a majority of the court upheld some key jury findings, such as that cigarettes are addictive and harmful to one's health, and that the tobacco companies were dishonest in their public statements about the dangers of smoking. This way, when each alleged smoking victim brings suit, he or she will already have those claims proven, saving substantial court time, attorney fees and litigation costs.

In setting aside the $145-billion punitive damage award, the court unanimously held that punitive damages must be decided case by case.

No one should have any sympathy for an industry that used deception and strategic omission of health data to get customers hooked. Still, jury awards have to maintain some relationship to the harms actually and provably caused. The state's high court brought this case back to reality.

[Last modified July 8, 2006, 01:24:48]

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