Tobacco Takes a Hit

The plaintiffs were a grim collection of the walking wounded. Mary Farnan, who has been smoking since age 11, has lung cancer that has spread to her brain. Frank Amodeo's throat cancer forces him to eat through a hole in his stomach. Loren Lowery, a Vietnam veteran, has had part of his tongue cut out and his jaw replaced twice. Not the kind of opponents you'd want to challenge in front of a jury.

That's a lesson five tobacco companies learned the hard way last week, when a Florida jury found them liable for misleading smokers about the danger and addictiveness of cigarettes. Though the industry has settled big cases brought by several states seeking reimbursement for their costs in caring for victims of smoking-related illnesses, the Florida verdict marks Big Tobacco's first loss to individual citizens in a class action. It could signal even bigger liabilities in the future.

The Florida lawsuit, representing as many as 500,000 smokers, now enters the damages phase, seeking up to $200 billion. And that's just one state. The verdict could give a boost to more than 60 class actions pending across the U.S. Says Stanford law school professor Robert Rabin: "The industry's fear all along has been catastrophic liability in one of these aggregate cases, where thousands of claims are tied together."

The first phase of the Florida trial took eight months and involved more than 39,000 documents. But the plaintiffs' lawyers kept it simple. Cigarettes are addictive and dangerous, they told the jury. The industry has manipulated nicotine levels to make cigarettes more addictive, they argued, and misrepresented the risks. "This didn't require any grand or innovative legal strategy, because the facts about the industry's behavior were bad enough," says University of Miami law professor Clark Freshman.

The tobacco companies say they're being scapegoated. "It's by now common knowledge that smoking is more risky than not smoking," Philip Morris lawyer Robert Heim told the jury. Did the smokers miss all those Surgeon General's warnings? Said Heim: "If somebody started smoking a pack a day in 1966, they would have had an opportunity to see those warnings on the packs 200,000 times."

But nicotine is so addictive that even doctors who know they should quit can't do so, the plaintiffs argued. They added that the industry has muddied the waters about smoking's risks. For example, six tobacco CEOs told Congress a few years ago that nicotine isn't addictive. Yet tobacco companies also argue that everyone knows cigarettes are addictive and cause cancer.

To collect damages, each of the nine lead plaintiffs in the Florida case needs to show that he or she was deceived and that the illnesses were caused by smoking. So far, no one has figured out how to sort through the individual claims of the other half a million class members. And it may not get that far. The defendants will no doubt appeal the jury's verdict, and they have often fared well on appeal. In a little more than a year, Florida appellate courts have thrown out a $1 million verdict and a $750,000 verdict in tobacco cases. The industry took heart last Friday when a Louisiana jury absolved two tobacco companies of responsibility in the cancer death of an individual smoker.

Still, 1999 is shaping up to be Big Tobacco's worst year in court. Even before the loss in Florida, a California court awarded $26.5 million to a lung-cancer victim in February, and an Oregon court awarded $32.8 million to another cancer victim in March. The latest cases suggest the public may no longer be buying the industry's defenses. When a tobacco executive at the Florida trial tried to deny that cigarettes are harmful, one juror could be seen rolling her eyes. A legal system that for decades favored the cigarette companies may be kicking the habit.