Jump to full article: The Wall Street Journal Interactive Edition, 2002-06-24
Author: GORDON FAIRCLOUGH / Staff Reporter of THE WALL STREET JOURNAL
Intro: Judge John W. Lungstrum of the U.S. District Court in Kansas City wrote in his decision that "Reynolds' conduct was highly blameworthy and deserving of significant punishment." He added, "The evidence does not reflect that Reynolds has repented of its ways."
Judge Lungstrum's ruling, handed down Friday in the case of a man made ill by smoking , capped several weeks of legal setbacks for cigarette makers. The string of verdicts and rulings in different states has renewed questions about the magnitude of the threat that lawsuits filed by individual smokers pose for tobacco companies.
"The scale of damages that juries are awarding is increasing, and judges are going along," said Martin Feldman, a tobacco analyst at Merrill Lynch in New York. "Individual claims may prove a much greater challenge to the industry than many have said." . .
his is the first award of punitive damages against a tobacco company by a federal court, where strict rules of evidence tend to favor defendants more than in state courts.
Reynolds blasted the punitive award as "excessive and unwarranted" and said it will appeal. "We will continue to aggressively defend these cases," said Charles A. Blixt, Reynolds's executive vice president and general counsel. "I'm confident that we'll prevail once we appeal."
As for whether the tide is turning against cigarette makers, Mr. Blixt said, "I don't think this is an adverse trend. It's inherent in the vagaries of the jury system. If you're trying enough cases, you're going to lose some." He added, "Nobody thought there was a big trend when we won six in a row." . .
Mr. Blixt said the U.S. Supreme Court has agreed to hear a case in which large punitive damages were awarded against an insurance company, and that the court's ruling in that case may help clarify the constitutional limits on punitive damages. . .
Judge Lungstrum went to great lengths in his opinion to explain why a higher multiple is justified in the Reynolds case. He noted that Reynolds's conduct resulted in very serious and foreseeable harm to the plaintiff. And he said that Reynolds "did not deceive him about facts which might affect the value of a luxury automobile," as was the case in BMW v. Gore, but instead deceived him about risks to his health.
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