Calling it "grossly excessive," the Florida Supreme Court has affirmed the verdict made by a state appeals court in May 2003 that appealed a $145 billion damage award to Sunshine State smokers, according to a report by Bloomberg News.
The original punitive damages were decided by a Miami jury in July 2000. The suit, filed in 1994, involved 700,000 smokers in Florida, and companies such as Philip Morris, a unit of Altria Group Inc., and Reynolds Tobacco, a unit of Reynolds American Inc. among others.
The $145 billion was the second part of a three-phase trial. In this format, punitive damages are determined before compensatory damages to each class member, the report said. The Court of Appeals overturned the original verdict and award because "the issue of damages requires individualized proof with regard to each smoker." It added that "the fate of an entire industry and close to a million Florida residents cannot rest upon such a fundamentally unfair proceeding."
This appeal removes a large financial risk to the tobacco industry from smoking-related lawsuits and also allows Altria to continue with its plan to break up the company to bring more value to shareholders, the Bloomberg News report stated.
"It allows Philip Morris to move forward immediately," David Dreman, who manages $15 billion at Dreman Value Management in Jersey City, N.J., including 14.9 million Altria shares and 2.6 million Reynolds American shares, told Bloomberg News.
In November, Altria CEO Louis Camilleri said that the separation of the company's food and tobacco segments hinged on the Florida case and a similar case in Illinois, which it won, as well as the U.S. Department of Justice's racketeering suit. The $14 billion decision in the racketeering suit is due soon, the report stated.
This ruling follows one made by the Illinois Supreme Court in December that ruled against a $10.1 billion damage award to smokers from Philip Morris.