Steve Quayle News Alerts

October 4, 2002

A Los Angeles Superior Court jury Friday ordered tobacco giant Philip Morris Cos. (MO) to pay $28 billion in punitive damages to a 64-year-old woman with lung cancer who sued the company for fraud and negligence.

Analysts said the verdict -- believed to be the largest punitive damages award in a tobacco liability lawsuit -- will almost certainly be reduced on appeal. But the jaw-dropping amount suggested growing hostility toward the tobacco industry.

The 12-member jury made the award to Betty Bullock of Newport Beach, Calif., who started smoking when she was 17 and was diagnosed last year with lung cancer that has since spread to her liver. Last month, the jury ordered the tobacco company to pay Bullock $750,000 in damages and $100,000 for pain and suffering.

Philip Morris said it would appeal.

"This jury should have focused on what the plaintiff knew about the health risks of smoking, and whether anything the company ever said or did improperly influenced her decision to smoke or not to quit," said William Ohlemeyer, the company's associate general counsel.

Before Friday, the biggest verdict won by an individual against a tobacco company was $3 billion, awarded in June 2001. Philip Morris was ordered to pay the amount to Richard Boeken, a former heroin addict with cancer who died in January. The verdict was later reduced by a judge to $100 million.

"I think the judge will see this as a runaway jury award," Merrill Lynch tobacco analyst Martin Feldman said. He noted that Philip Morris has never lost a case on appeal.

During Bullock's trial, Philip Morris did not try to defend its past actions. Instead, the company turned the spotlight on Bullock and her decision to smoke. The strategy was a major shift from previous defense efforts.

"Testimony during the trial showed that Ms. Bullock was aware of the health risks of smoking and was warned repeatedly of those risks by her doctors over four decades, and her daughter also urged her to quit. Her response: `I am an adult, this is my business,"' said William Ohlemeyer, the company's associate general counsel.

Bullock's lawyer, Michael Piuze, argued that Philip Morris concealed the dangers of cigarettes with a widespread disinformation campaign that began in the 1950s. He told jurors it was "the largest fraud scheme ever perpetrated by corporations anywhere."

Piuze used photographs of Bullock, cigarette ads from her teenage years and internal tobacco industry documents to lay out his contention that Philip Morris concealed the dangers of cigarettes.

The company denied any campaign to fool smokers.

Two years ago, a jury awarded thousands of Florida smokers $145 billion in punitive damages against Philip Morris, R.J. Reynolds, Brown & Williamson, Lorillard and Liggett. The award has been appealed.

"At this point, it's really open season on the industry," said Richard Daynard, a law professor at Northeastern University in Boston and chairman of the Tobacco Products Liability Project.

"Juries all around the country are sending a message that this conduct was not only totally inexcusable but that it was so outrageous there is no amount of money that would be enough to punish the people who perpetrated it,"

The California case also drew interest because it follows an Aug. 5 state Supreme Court ruling that grants cigarette makers a new window of immunity. The decision said most statements and acts by tobacco companies between 1988 and 1998 cannot be used as evidence against them because of a law, now repealed, shielding them from liability.

Some analysts think the ruling will give cigarette makers ammunition to overturn three recent plaintiff awards in California -- including the Boeken verdict, which was also won by Piuze.

http://www.foxnews.com/story/0,2933,64850,00.html