A Judge Sparks Big Trouble for Big Tobacco
Monday, September 25, 2006JEFF YASTINE: The stocks of big tobacco companies got burned on Wall Street today on news the cigarette makers could face a lawsuit with a $200 billion price tag. A Federal judge today ruled the case involving so-called light cigarettes can be tried as a class action. As Stephanie Dhue reports, that means the tobacco companies could eventually pay damages to millions of smokers.
STEPHANIE DHUE, NIGHTLY BUSINESS REPORT CORRESPONDENT: The lawsuit claims smokers were deceived when tobacco companies promoted light cigarettes as a safer alternative to regular smokes. Michael Hausfeld brought the suit on behalf of light cigarette smokers.
MICHAEL HAUSFELD, PARTNER, COHEN, MILSTEIN, HAUSFELD & TOLL: The companies knew even at the time they first promoted these cigarettes that they were as dangerous, if not in fact more dangerous, than a regular cigarette.
DHUE: Tobacco companies including Altria, RJ Reynolds and Lowes, are appealing the ruling. Altria, the parent company of Philip Morris, says smokers chose light cigarettes for a variety of reasons and those reasons have to be sorted out on individual basis not in mass litigation.
WILLIAM OHLEMEYER, ASSOCIATE GENERAL COUNSEL, ALTRIA: It`s not appropriate and it`s not fair to treat them in the aggregate because you cannot fairly decide who is liable and who is not unless you look at these individual issues.
DHUE: By certifying the class, U.S. District Judge Jack Weinstein bucked the trend of courts narrowing class actions. The judge has a reputation as the grandfather of mass torts, having presided over cases involving the makers of guns and Agent Orange, as well as a previous tobacco case.
JONATHAN TURLEY, PROFESSOR, GEORGE WASHINGTON UNIVERSITY LAW SCHOOL: He is, in many ways, the most feared judge for the industry. He has the intestinal fortitude and the inclination to hand down major national remedies, even to the tune of $200 billion.
DHUE: The tobacco industry is on a roll with legal victories recently, with two class action lawsuits and a major punitive damages claim tossed out. And many observers expect this case to follow a similar pattern.
FRED BURK, PRESIDENT, JOHNSTON LEMON ASSET MANAGEMENT: My conclusion is that they will not lose, that there has been enough - there`s enough evidence and there`s sufficient grounds to basically decertify a class action if it actually came about.
DHUE: Johnston Lemon Asset Management owns shares of Altria. A Federal judge has already ruled that tobacco companies must stop marketing light cigarettes by the end of the year. But that decision, too, is on appeal. Stephanie Dhue, NIGHTLY BUSINESS REPORT, Washington.
