[Intl-tobacco] Tobacco firms face war on all fronts

[robert weissman]

Tobacco firms face war on all fronts
The Herald (UK)
June 1, 2005

CALUM MACDONALD

Analysis

BIG Tobacco may have triumphed in the Court of Session yesterday, but the
McTear case was only a skirmish in a war being waged on the industry
world-wide.
Multinationals such as Imperial Tobacco are fighting on hundreds of fronts
from New Zealand to Guatemala as both individuals and governments try to
force the industry to pay for the damage its products are alleged to have
wreaked.

While the majority of tobacco litigation is played out in American
courtrooms, legal cases have been filed in about 30 other countries
including Israel, Uganda, Turkey and Saudi Arabia.

These fall into two different categories: lawsuits brought by individuals o=
r
groups seeking compensation for damage to their health caused by smoking,
and cases brought by governments and health insurers attempting to reclaim
the costs of treating diseases triggered by smoking.

However, it is in the US where the stakes are highest and where the tobacco
industry is facing its toughest challenges.

In 1998, British American Tobacco, Philip Morris and RJ Reynolds settled
claims against them by attorney generals in 46 US states who were suing for
the recovery of money spent by Medicaid =96 the state government medical ca=
re
programme.

The companies, which had previously defended every case to the utmost,
agreed to pay the states =A3124bn over 25 years in return for a limitation =
on
future liabilities.
However, a year later the US federal government launched its own
multi-billion dollar action through the department of justice.

The federal government is trying to reclaim money spent on treating
smoking-related illnesses, which amounts to about =A311bn a year, and also =
to
force tobacco companies to finance programmes which help people quit
smoking.

Although two of the federal government's four claims were thrown out of
court in 2000, the remaining two charges under a racketeering law were
allowed to proceed.
In its last budget, the US government increased the funding for the case to
=A313.7m.

The most celebrated case in the US to date is the Engle class action, named
after Howard Engle, a paediatrician who developed emphysema. It was the
first case of its kind to go to trial.

Although it was originally filed in 1994 on behalf of all American smokers,
a Florida state appeals court limited the class to smokers in that state.

The tobacco companies were found guilty of making a damaging and addictive
product and of conspiring to conceal the dangers of smoking. They were foun=
d
liable for punitive damages. Using their vast resources, they appealed the
verdict, albeit unsuccessfully.

The trial has now moved into a new phase which will eventually decide the
amount of the lump sum that will be paid to smokers in Florida, but the
prospect of bankruptcy for the tobacco industry won them an odd ally: the
state of Florida itself.

The court had ruled that the tobacco companies must post a bond equal to th=
e
amount of damages awarded if it is to appeal them once they are decided.
This prompted the Florida state legislature to pass a bill limiting the
amount of any bond to =A355m or one-tenth of the worth of the companies,
whichever is lowest.
Florida's politicians do not want to see the companies bankrupted as that
would jeopardise the =A3124bn deal between the 46 states reached seven year=
s
ago.
Under the terms of the settlement, Florida receives =A3274m annually for 25
years.

The companies, as in every case they have faced so far, plan to appeal the
Engle case once punitive damages have been decided.

Nevertheless, there have been some successful cases brought by individuals
in the US. Patricia Henley, a former smoker who developed lung cancer, was
awarded =A327.4m in punitive damages from Philip Morris in 1999.

Although a judge subsequently halved the award, he did not overturn the
verdict.

The biggest single award made to an individual was =A31.6bn to Richard Boek=
en
in Los Angeles in 2001. Jurors found against the cigarette maker on all six
counts of fraud, negligence and making a defective product.

The punitive damages against Philip Morris were reduced to =A354.8m by the
judge, but even that is being appealed by the company. Mr Boeken died in
2002 without having received any money.

In another case against Philip Morris, a jury in Portland, Oregon, awarded
=A353m in damages to the family of Jesse Williams in March 1999, while a wo=
man
with inoperable lung cancer earlier won =A332m in San Francisco. Both award=
s
were also reduced by judges.

The tobacco companies have also enjoyed their share of success in the
courtroom.

A jury in Memphis, Tennessee, cleared three companies of responsibility for
causing the deaths of three smokers. And in Kansas City, Brown and
Williamson were found not to be liable for the death of Charles Steele, who
died of lung cancer.

Outside the US, individual and class actions are being heard in Australia,
Brazil, Canada, France, Ireland, Israel, the Netherlands, New Zealand,
Turkey and Uganda.

Two months ago, a court in Rome ruled that British American Tobacco was
responsible for the death of Mario Stalteri, who died of lung cancer in
1991.

It was the first successful suit against a tobacco company in Europe, and M=
r
Stalteri's family was awarded =A3140,000.

However, the company has promised to take its appeal against the decision t=
o
Italy's highest court.

Margaret McTear might have lost her battle, but that does not mean the war
is over.

The NHS Confederation is investigating the possibility of suing the tobacco
companies.