Legal Triumph for Cigarette Makers
A highly anticipated legal ruling went in favor of the tobacco industry Thursday, as the supreme court of Florida upheld a decision to disallow a massive punitive-damages award against cigarette makers.
Because of the ruling, companies like Altria (MO), the parent of Philip Morris, Reynolds American (RAI), Loews (LTR) and Vector Group (VGR), won't have to pay $145 billion in punitive damages in a lawsuit known as the Engle case.
The Florida supreme court agreed with a lower-court ruling that the case shouldn't have been certified as a class action and said the award was excessive.
The case goes back to 1994, when a doctor named Howard Engle and a small group of other plaintiffs sued the tobacco companies. The case eventually went to trial, ending in 2000 with a jury saying cigarette manufacturers had lied about their products and deciding to assess the huge monetary penalty.An appellate court threw out the $145 billion award in 2003. Shares of Altria surged 7.3% to $78.71 when the decision became known. Reynolds American was up 4.8% to $119.85, Vector rose 4% to $17.04 and Loews advanced 2% to $36.22.
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