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Bill protects tobacco payments

Anti-smoking advocates say lawmakers are shielding tobacco companies, which face punitive damages.

By JO BECKER

© St. Petersburg Times, published May 6, 2000


TALLAHASSEE -- Hoping to preserve hundreds of millions of dollars tobacco companies pay the state each year, the Legislature passed a bill Friday to protect the industry from a massive class-action lawsuit brought by sick Florida smokers.

Following the lead of other states, lawmakers set a cap on the amount tobacco companies and other defendants in class-action lawsuits must post in a bond in order to pursue an appeal.

Each defendant would have to post bonds of up to $100-million, or 10 percent of their net worth, whichever is less.

Lawmakers are concerned that the Miami class-action lawsuit could jeopardize the state's own settlement with the four largest tobacco companies, worth $17.4-billion during the next 30 years.

A Miami jury last month awarded $12.7-million in compensatory damages to three representative smokers. It will soon begin the next phase of the trial -- awarding punitive damages for as many as 500,000 Floridians. The fear is that the award could near $300-billion, potentially bankrupting tobacco companies and stopping payments to the state.

Gov. Jeb Bush has indicated that he thinks such a cap will help protect the state, which uses the money to fund programs for the elderly and children.

"It's all to give the tobacco companies the right to appeal -- we're not trying to shield them," said Sen. Tom Rossin, D-West Palm Beach. But anti-smoking advocates said that is exactly what lawmakers have done. "This is unprecedented involvement in an ongoing class-action lawsuit," said Ralph De Vitto, vice president of government relations for the American Cancer Society. "Why are they choosing to interfere when tobacco is involved? They are clearly taking an action to shield this industry."

Lawmakers failed to adopt Bush's plan to sell part of the state's future tobacco revenues at a discount to investors. The idea was that the state would receive money up front that it could then invest in the market. Investors would assume the risk that the tobacco companies would continue to make payments.

But experts estimated that even if the state obtained a good rate of return on the investment, the deal could cost the state up to $900-million. The investors who would buy the future proceeds are also jittery about the legal climate surrounding the tobacco companies and would demand a substantial discount.

The Senate refused to go along with the House to pass a law that would have authorized the state to move forward with the deal. Instead, a task force will study the issue. If the market is right and the task force recommends going ahead, the Legislature would have to be reconvened to approve the deal.

Lawmakers also agreed to set aside $5-million to help tobacco farmers who agree to grow other crops. But they scrapped an idea to impose a tax that would be applied on cigarettes sold by companies that do not make settlement payments to the state.

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