Philip Morris Lawyer Says Proposed Verdict Would Kill Cigarette Firms

MIAMI — Calling the immense damage award being sought in a landmark class-action case a “death warrant” for the U.S. tobacco industry, a lawyer for Philip Morris Co. said Tuesday that the proposed $154-billion verdict would destroy cigarette makers “not once but 10 times over,” while idling tens of thousands of employees, wiping out shareholders and ceding the domestic cigarette market to foreign firms.

In a voice dripping with scorn, defense lawyer Dan Webb told a state court jury that the amount of punitive damages being sought for harm done to sick and deceased Florida smokers is “an insult to your intelligence”--exceeding by a factor of 10 the net worth of the five tobacco defendants: R.J. Reynolds Tobacco Co., Brown & Williamson Tobacco Corp., Lorillard Tobacco Co. and Liggett Group Inc. and Philip Morris.

“That’s not a request for punitive damages,” Webb said. “That’s a request for a death warrant for each of these five companies.”

The lawsuit being tried in Dade County Circuit Court, called the Engle case after lead plaintiff Howard Engle, is the first class action on behalf of sick smokers to go to trial.

Closing arguments in the crucial punitive-damages phase began Monday with plaintiffs’ attorney Stanley Rosenblatt calling $154 billion an “appropriate” and “just” level of punishment for the past sins of cigarette makers and to deter future misconduct. Webb is to be followed by lawyers for the four other firms, with a verdict possible by the end of the week.

Any punitive damages would be in addition to compensatory damages that could theoretically be won by tens of thousands of individual class members who prove their claims in mini-trials.

In two prior phases of the marathon case, the six jurors found the industry guilty of lying about the risks and addictiveness of smoking, and awarded three class representatives $12.7 million in compensatory damages.

Before a packed courtroom that included tobacco chief executives Mike Szymanczyk of Philip Morris, Nick Brookes of B&W; and Martin Orlowsky of Lorillard, Webb told jurors that Rosenblatt’s request went far beyond the law, thus inviting them “to become a runaway jury.”

Reading from an instruction the jury will get from the judge after closing arguments, Webb said any punitive award must be based on the companies’ “current” resources--and not on years of potential future earnings. Moreover, he said, Florida law bars any damage award that would destroy or bankrupt a company.

Saying his client’s net worth is a little more than $6 billion, Webb told jurors that an award even far smaller than Rosenblatt’s request would destroy the company: “If you award $6 billion, you’ve got Philip Morris. It’s gone. It’s history. It’s out of here.”

In fact, Webb told jurors, they should not award any punitive damages in view of what he described as sweeping efforts by Philip Morris and its rivals to clean up their act.

He said Philip Morris and the others are making multibillion-dollar annual payments under litigation settlements they reached with the states--which are spending a portion of the funds on efforts to fight smoking and on other worthwhile programs. Under terms of the settlement, cigarette makers also have curtailed objectionable marketing practices and have poured hundreds of millions of dollars into an anti-smoking advertising campaign.

Webb said Philip Morris has taken additional steps on its own, including putting $100 million last year into its own campaign to fight underage smoking. This is more, Webb said, than the firm spent to advertise its flagship Marlboro brand.

He said that if jurors are committed to punishing the firm, $75 million in punitive damages would be a more appropriate amount.

On Wall Street, Philip Morris shares slid $1.06 to $25.94, while RJR Tobacco lost $1.56 to $27.94.