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Thursday, 7 June, 2001, 09:43 GMT 10:43 UK
Q&A: Tobacco litigation
A US jury has awarded the largest individual punitive damage award to a a smoker with incurable lung and brain cancer. BBC News Online takes a closer look at the issues surrounding tobacco litigation.

What is the case about?

Tobacco giant Philip Morris was ordered to pay more than 2bn in compensation to a man whose nicotine addiction left him with incurable cancer.

The Los Angeles jury decided Philip Morris did not properly warn Richard Boeken of the risks of smoking.

It ordered Philip Morris to pay him 2bn in punitive damages and 3.5m in general damages after finding the company guilty of six counts of fraud, negligence and making a defective product.

The award is the largest individual punitive damage award ever against a cigarette smoker.

The largest judgement against the tobacco industry was $145bn awarded last year to thousands of Florida smokers in a class action lawsuit.

Will there be an appeal?

Philip Morris has already vowed to appeal and many lawyers say it has a strong case.

The tobacco company argues that Mr Boeken ignored a "mountain of information" about the health risks of smoking.

Philip Morris argues that the jury had been given improper instructions and was prevented from hearing key evidence, and quite simply, the award is too high.

If the case, as is likely, reaches the US Supreme Court, it may not pass their tests on the correct level of damages.

"The punitive damage award has to bear some relationship to compensatory damage," attorney Michael Hausfeld said. "Clearly here the punitive award is an expression of total outrage and I'm not sure under the Supreme Court test for a single individual that kind of differential would be upheld."

So, will Mr Boeken ever get the money?

The near-term odds are not good.

Only one person has received any damages from a tobacco company so far.

In 1996, a jury called on Brown & Williamson Tobacco Corp. to pay $1.1m to a 70-year old ex-smoker.

Since then, the court ping ponged its way through various appeal courts, until the Supreme Court finally ruled in Grady Carter's favour.

Other victories by smokers are currently working their way through the US appeal courts, including the landmark class action lawsuit from Florida.

Could this happen in Europe?

The size of the award could encourage more British people to take legal action, Action on Smoking and Health director Clive Bates said.

There is one case outstanding in Scotland and more people may be encouraged to come forward.

But crucially, outside of the US, the damages paid are not high enough to encourage individuals or law firms to take the risk of losing a court case.

Many in the UK will also have been discouraged by a case in 1999.

A UK judge ruled that 50 smokers with lung cancer had not made their claims within the statutory three years allowed between diagnosis and starting legal action.

Given that the case ended on a technical legal point, the substantive arguments and evidence were never heard in court.

So, will the litigation ever end?

The tobacco industry has continually sought to reassure investors, by saying that the litigation environment is getting better.

Wednesday's judgement does go some way to shattering that illusion.

There have been class action lawsuits as well as actions taken by insurance companies and US states. More individuals are now thought likely to sue.

What does this mean for industry?

The significance of Wednesday's decision is that the payout is so large - a payout could hit Philip Morris.

Shares in Philip Morris have gained an estimated 16% since late March. In after hours trade on Wednesday, shares fell $1.75 to $48.25.

But the outlook for the tobacco companies is not all grim. More and more Western consumers may be refusing to light up, but there are huge markets in developing countries. In many cases, legislation governing advertising is far less strict in these countries as well.

See also:

07 Jun 01 | Americas
15 Jul 00 | Americas
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