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Wednesday, October 20, 1999 Published at 22:26 GMT 23:26 UK

World: Americas

Tobacco industry faces $500bn payout

Cigarette firms wanted to settle on an individual basis

US tobacco companies could face paying up to $500bn damages after an appeals court ruled that 500,000 smokers can be awarded compensation in a single lump sum.

Tobacco wars
  • The US legal battle
  • Tobacco economics
  • Smoking goes global
  • Cigarette health file
  • Timeline: the tobacco war
  • Florida's Third District Court of Appeal rejected arguments by tobacco companies that punitive damages must be determined one smoker at a time - overturning its previous ruling of 3 September.

    Dan Webb, lead attorney for the tobacco companies, insisted that a single award would cause an "enormous amount of irreparable harm to the industry".

    [ image: Analysts say the ruling will seriously damage the tobacco industry]
    Analysts say the ruling will seriously damage the tobacco industry
    Analysts say that the latest ruling represents a serious setback for the tobacco industry, which could have more easily defeated individual compensation claims.

    In July, jurors found the five largest US cigarette makers and industry groups had produced a defective and deadly product.

    The same jury is to determine damages in the second phase of the trial, due to begin on 1 November.

    US juries have awarded damages in smoking liability cases only five times - twice in Florida and once in New Jersey, Oregon and California.

    Both Florida verdicts and the New Jersey verdict were overturned on appeal.

    The $206bn national settlement reached with the tobacco industry in November bars states from suing to recoup the costs of treating sick smokers, but does not stop lawsuits by individuals.

    The Florida defendants are Philip Morris, RJ Reynolds Tobacco, Brown and Williamson Tobacco, Lorillard Tobacco, the Liggett Group and the industry's Council for Tobacco Research-USA and Tobacco Institute Inc.

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