A Florida woman on Thursday won a $300 million judgment against Altria Group's (MO) unit Philip Morris USA -- the largest award yet among 8,000 lawsuits filed in the state against tobacco companies. Jurors took three hours to return the award to Cindy Naugle, 61, of Ft. Lauderdale, a former smoker who was given $56.6 million in compensatory damages and $244 million in punitive damages. Philip Morris is responsible for all of the punitive damages and for 90% of the compensatory ones. The jury found Naugle 10% at fault.
Naugle says she started smoking at 20 in 1968 and made repeated attempts to quit, finally succeeding in 1993. Today, she has emphysema, requires a 24-hour oxygen and must travel in a wheelchair.
Hiding the Truth
Naugle's lawyer Robert W. Kelley said in a statement, "She told the jury that had she known then what the tobacco companies already knew, but had concealed -- namely, that nicotine is a highly addictive drug, and cigarettes were considered by Philip Morris to be a drug-delivery device -- she never would have taken that first puff."
The plaintiff admitted her fault to the jury, Kelly said, but Philip Morris refused to accept any.
Kelley predicts a long series of losses for Big Tobacco. "The cigarette companies managed to hide the truth about their product for a long time," said Kelley. But now when a jury hears "what these companies knew and when they knew it, they almost always side with the addicted smokers."
Altria, based in Richmond, Virginia, says it will seek further review of the verdict. "From the beginning, this case was marked by a fundamentally unfair and unconstitutional trial plan," Murray Garnick, Altria's associate general counsel, said in a statement. "Rulings by the trial judge that allowed the jury to hear extensive evidence totally unrelated to the individual smoker [is] in violation of Florida law and established constitutional limits on punitive damage proceedings recognized by the United States Supreme Court."
In 2006, Florida's Supreme Court decertified a $145 billion class-action jury award against tobacco companies, ruling that each case against tobacco had to be decided individually. That opened the door to thousands of suits. The court also allowed to let stand in each case the jury's findings that tobacco companies knowingly sold dangerous products and hid risks from the public.
A $28 Billion Award
In August, a Los Angeles jury awarded $13.8 million in punitive damages against Philip Morris USA in the retrial of a case that originally netted a record $28 billion to a lifetime smoker. In that case, too, Altria asserted that the jury heard "improper arguments and evidence that violated state and federal law on punitive damages."
It seems this is Altria's main card in winning cases against it. But if the latest verdict and damages stand, and with thousands of cases pending, the largest tobacco company in the U.S. may find itself in a bit of a pickle.
Tobacco smoking is responsible for approximately 443,000 deaths in the U.S. each year. Nearly 75% of smokers in the U.S. report that they want to stop smoking, but fewer than 5% of would-be quitters remain tobacco-free.
What's your investing game plan?View Course »