Smoked!

Even in this age of runaway jury verdicts, the punitive-damage awards that rang out in a hushed Miami courtroom last Friday were impressive. Against Philip Morris--$73.96 billion; R.J. Reynolds--$36.28 billion; Brown & Williamson--$17.59 billion; Lorillard--$16.25 million; Vector Group (owner of Liggett)--$790 million. By the time Circuit Court Judge Robert Kaye reached the bottom of the verdict sheet, the total had climbed to $144.8 billion. "A lot of zeros," the judge observed dryly.

It was, in fact, the most zeros ever. The record award, in favor of a class of some 500,000 Floridians made sick by smoking, took punitive damages to a bold new level. And it quickly set off a heated debate over the future of Big Tobacco. Antismoking forces bluntly predicted that the ruling could eventually cause the tobacco industry to go up in smoke. But the cigarette companies, backed by Wall Street, called the award a $145 billion joke, a judicial travesty that would be snuffed out on appeal.

The Florida suit had made history even before it hit the damages phase. It was the first time a class action against Big Tobacco had ever gone to trial. The cigarette companies have already lost some suits by individual smokers--a $26.5 million award in California from a February 1999 verdict, $33 million in Oregon a month later--but those can be seen as just the cost of doing business.

Class actions pose a far greater threat because they give plaintiffs the ability to mount ever larger legal offensives. Armies of lawyers could represent thousands of plaintiffs, and the potential losses would be correspondingly larger. And the cost of defending the cases would escalate. Tobacco companies have succeeded in blocking 24 lawsuits around the country from proceeding as class actions, and they expected to do that in Florida too. But plaintiffs' lawyer Stanley Rosenblatt persuaded the Florida courts--over heated objections from the other side--to let him represent a stateful of smokers.

Rosenblatt put on an epic case--one that stretched out for two full years, with testimony from 157 witnesses. A skilled trial lawyer with a flair for the dramatic, he pulled at jurors' heartstrings by putting his ailing clients front and center. Mary Farnan, a nurse with lung and brain cancer, began smoking at age 11 and was unable to quit even during early rounds of chemotherapy. Frank Amodeo, a 60-year-old Orlando clockmaker with throat cancer, is unable to swallow food. Rosenblatt had hoped to put Angie Della Vecchia on the stand during the damages phase. She died before she could testify, but Rosenblatt made sure the jury saw the teary face of her husband Ralph in court.

And Rosenblatt backed up the pathos--after all, a nurse like Farnan knows the risks of smoking--with strong evidence of malfeasance by the tobacco companies. Taking advantage of mounds of industry documents turned over in other smoker lawsuits, he argued that the cigarette makers had intentionally kept the public in the dark about the dangers of smoking. Even in the face of that evidence, the tobacco companies tried to avoid conceding that cigarettes are addictive or cause cancer. They made a big mistake, says Rosenblatt. "To continue to carry on with this moronic debate... It made the jury as angry as we wanted them to be."

The first phase of the lawsuit ended last July when the jury--composed of one smoker, one ex-smoker and four nonsmokers--found that the defendants made a deadly product. In April the jurors ordered the defendants to pay $12.7 million in compensatory damages to three individual smokers who represented the class. At last week's punitive phase, Rosenblatt urged the corporate equivalent of a death sentence, asking the jury for $154 billion.

In a courtroom rarity, tobacco executives took the witness stand. They testified that there was no need for punishment because they had cleaned up their act, in part by spending millions of dollars on advertising to discourage young people from smoking. And they had agreed in 1998 to pay out $246 billion to settle a lawsuit by a group of states. Brown & Williamson lawyer Gordon Smith pleaded on behalf of the company's 7,000 employees, who he said are working to make the company more responsible. "I ask that you don't kill that dream," Smith urged the jurors. They didn't budge.

The $145 billion award far exceeds the old record for punitive damages--a paltry $5 billion dished out for the Exxon-Valdez environmental disaster. (It's on appeal.) Critics of Big Tobacco hailed the award as a breakthrough. "This is unquestionably the most important case in terms of both real dollars and impact on the industry," said Mark Gottlieb, a lawyer with Northeastern University law school's Tobacco Products Liability Project. Gottlieb dismissed the defendants' prediction of a reversal. "We think it will stick and that the industry will actually have to pay," he said. The award has the potential to be more devastating to Big Tobacco than even the states settlement, Gottlieb said, because unlike the payouts to states, which are spread over a period of years, this entire amount might have to be paid at once.