A Florida jury yesterday ruled against the tobacco industry in the first class action lawsuit by sick smokers to come to trial, finding that cigarette makers addicted and defrauded smokers and could be forced to pay billions of dollars in damages.
In the broadest ruling to date in the legal war over tobacco, the Miami jury concluded that cigarette makers "engaged in extreme and outrageous conduct," concealing cigarettes' dangers, conspiring to hide their addictiveness and making a product that caused more than a dozen deadly diseases from heart disease to lung cancer.
Though no damages were awarded during this phase of the proceedings, the verdict opens the door for hundreds of thousands of Florida smokers and their heirs to seek money from the companies.
"It's a tremendous watershed," said anti-smoking advocate Richard Daynard, a law professor in Boston. Matthew Myers, of the Washington-based Campaign for Tobacco-Free Kids, called it the "most widespread condemnation of the industry . . . ever issued in any court . . . regardless of whether a dime is ever paid out."
While the verdict could be overturned on appeal, analysts said the jury's findings augured longer and more expensive legal battles around the country for the industry. Smokers' "success in such a difficult case is likely to spur additional lawsuits" by both individuals and massive groups, said tobacco litigation analyst Mary Aronson.
Tobacco companies did not comment on the verdict because Miami Judge Robert Kaye has barred attorneys and all parties involved in the case from discussing it with reporters.
Wall Street tobacco analyst Martin Feldman predicted that tobacco stocks "will all be down [today] as a result of this decision," but he added that he believes the companies will ultimately prevail.
Several state and federal courts have turned back tobacco class action cases long before they got to trial, ruling that the issues, including smokers suffering from different diseases and smoking different brands, are too diverse to be lumped together in a single court case, Feldman said. He predicted that this verdict will not stand on appeal because of the same issues.
University of Miami law professor Clark Freshman, however, said that Florida courts have interpreted statutes allowing class action cases much more loosely than other state and federal courts.
The tobacco industry had sought to end its legal troubles with a $206 billion settlement that ended lawsuits by some 40 states over the costs of treating sick smokers. But that settlement did not bar other lawsuits from going forward.
As a result, the industry continues to be locked in a seesaw battle over cigarettes being fought with different types of lawsuits in various courtrooms around the nation. Just this year, the industry has prevailed in several individual cases and in an Ohio lawsuit brought by union health funds to recover millions of dollars to treat sick smokers. During the same period, however, the companies lost two cases in Oregon and California, where smokers were awarded more than $55 million in damages.
Yesterday's verdict is particularly significant because it comes in a class action case, in which hundreds of thousands of smokers join together in a class to sue. In the next phase of the trial, which will be heard by the same six jurors, nine individuals who represent the class will seek damages against the companies for their illnesses. The group includes one smoker who has lost both legs to a circulatory disease and two who have lost their voices.
The third phase would open the door to sick Florida smokers or heirs to seek damages for their illness or loss.
While the jury ruled yesterday that the companies addicted smokers and concealed the truth about smoking's dangers, the industry has argued in court documents that each smoker still must prove that it was the company's fault that he smoked and that cigarettes caused his specific illness. The industry has been successful for years in defeating lawsuits by arguing that smokers knew the risks and continued to smoke out of choice.
Aronson, however, said that defense may not work this time. "If this jury can find in the abstract that smoking causes all these diseases, I think it will be easier [to rule against the companies] when faced with individual plaintiffs with devastating and very obvious diseases," she said.
The Florida case, known as Engle after a retired pediatrician who is the lead plaintiff, was mounted by an unlikely duo, Stanley and Susan Rosenblatt. The husband-and-wife lawyer team from Miami had been written off by wealthier trial lawyers as small-timers on a quixotic quest. But that talk was squelched in 1997 when the Rosenblatts wrung a $349 million settlement from the industry in a Florida class action suit by flight attendants who said they were injured by secondhand smoke.
The jurors heard eight months of testimony and saw thousands of previously secret tobacco documents before retiring to deliberate last week.
The defendants are the nation's five largest tobacco companies -- Philip Morris Cos., R.J. Reynolds Tobacco Co., Brown & Williamson Tobacco Corp., Lorillard Tobacco Co. and Liggett Group Inc. -- and two industry organizations, the Council for Tobacco Research and the Tobacco Institute.
The verdict was announced after the stock market closed. Shares of Philip Morris, which fell $1 to close at $39.50, dropped further to $37.87 1/2 in after-hours trading. R.J. Reynolds fell 75 cents to close at $30.87 1/2.
CAPTION: Guillermo Saa, second from left, embraces unidentified woman as tobacco case verdict is read.