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Thursday, 7 June, 2001, 04:09 GMT 05:09 UK
Tobacco 'tailspin' fears after jury ruling
Two juries in a week found against the industry
A 1998 tobacco settlement among US states has not stopped lawsuits from going forward in all states. And as BBC News Online's David Schepp explains, American juries are sending strong messages to tobacco companies about the dangers of their product

For the second time this week, a US jury has sided against the tobacco industry.

This time, a Los Angles Superior Court jury awarded a California man a record $3bn (2.15bn) in punitive damages - by far the largest award ever given to a single individual.

This man's life is over - $3 billion doesn't even begin to cover it

Juror Denise Key
The jury, in making its decision, said cigarette-manufacturer Philip Morris engaged in fraud and negligence and produced a defective product.

The ruling sent shock waves through the tobacco industry, which was still recovering from Monday's decision by a Brooklyn jury to award a major health insurer nearly $18m in damages for compensation for smoking-related costs.

The jury in that case found that Philip Morris and other tobacco companies engaged in deceptive business practices in a case brought by Empire Blue Cross/Blue Shield.

Smoked for 40 years

The plaintiff in the California case, Richard Boeken, smoked two packs of Marlboro cigarettes a day over the last 40 years. Philip Morris contends he ignored health warnings, which have been printed on the side of cigarette packs since the 1960s in the US.

Tobacco lawyers were watching the outcome of the California case closely because it was the first such case to reach trial in Los Angeles.

Cigarette makers are fending off three other California lawsuits in which they have been ordered to pay damages.

Gargantuan decision

The verdict is not just big, it is gargantuan - nearly 40 times larger than the $80m awarded an Oregon man in 1998, which was subsequently greatly reduced by a judge.

Because the industry's so big, any jury has to come up with an amount that's pretty sizable to make the tobacco companies at least notice what they are saying

Anti-tobacco lawyer Ed Sweda
Jurors who spoke out after the decision had little sympathy for Philip Morris and the tobacco industry - while anti-tobacco groups hailed the decision.

Ed Sweda, an attorney with the Tobacco Products Liability Project at Northeastern University in Boston said the verdict sent a message that juries were not getting soft on tobacco litigation.

"Because the industry's so big, any jury has to come up with an amount that's pretty sizable to make the tobacco companies at least notice what they are saying. This verdict is certainly just and proper given what the company engaged in and continues to engage in," he said.


Some analysts pondered whether the two decisions would send tobacco stocks into a tailspin.

Tobacco stocks in recent months have enjoyed strong gains after suffering under a 1998 settlement with dozens of states that cost the industry billions of dollars in fines and other expenses.

Shares of Philip Morris fell in response to the verdict, losing $1.75 in after-hours trading, having closed at $50 a share during regular New York trading.

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See also:

05 Jun 01 | Business
Insurer wins tobacco suit
15 Jul 00 | Americas
Smokers' $145bn court victory
30 May 01 | Health
EU steps up war on smoking
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Smoker gets $1.1m compensation
26 Apr 01 | Americas
US may abandon tobacco lawsuit
02 Aug 00 | Health
A global smoking battle
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Timeline: The tobacco war
15 Oct 99 | Americas
The US tobacco wars
07 Jun 01 | Americas
US smoker wins billions in damages
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