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Judge Tosses Out Fee Award To Lawyers in Tobacco Suit 

A New York state judge threw out $1.25 billion in attorneys' fees awarded to a group of law firms for their role in suing tobacco companies, saying an arbitration panel exceeded its authority in granting the money.

The ruling by Supreme Court Justice Nicholas Figueroa is a blow to plaintiffs' lawyers whose war against the tobacco industry helped lead to the historic 1998 national settlement that ended state suits against the industry.

The decision comes after an order issued during June by another New York state judge, Charles E. Ramos, who indicated he may void $625 million awarded by arbitrators to plaintiffs' lawyers who represented New York state in the 1998 settlement. Judge Ramos said the arbitrators "manifestly disregarded well-established ethical and public policies" by granting the $625 million. He hasn't issued a final ruling. . .

David N. Ellenhorn, who represented the Castano group, criticized the ruling and said the group will appeal to the state Appellate Division. "Obviously, my clients are shocked," he said. "We think, respectfully, that the judge made some very fundamental errors."

Jeffrey E. Stone, who represented the companies -- R.J. Reynolds Tobacco Holdings Inc., Brown & Williamson Tobacco Corp., a unit of British American Tobacco PLC, and Lorillard Tobacco Co., a unit of Loews Corp., said he was "extremely pleased."

"The court recognized the precise argument we made, that the arbitration panel exceeded its jurisdiction," Mr. Stone said. This is the only arbitration award that has been challenged by the industry. Mr. Stone wouldn't say why the industry chose to challenge this ruling, but in court arguments he called the $1.25 billion award "astronomical, unprecedented and obscene."

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