Florida's top court hands tobacco companies a big win
The Florida Supreme Court upheld a lower court decision that tossed out a $145 billion class-action lawsuit judgment against the nation's biggest tobacco companies, according to press reports.
The decision is a major win for Greensboro's Lorillard Tobacco Co. (NYSE: CG) and Winston-Salem's Reynolds American Inc. (NYSE: RAI), and it should free up millions of dollars that the companies had to post as bonds under Florida law while their appeal moved through the court system. It also removes a potentially giant liability.
The stocks of the companies involved rose Thursday morning on the news.
Carolina Group, a tracking stock that represents Lorillard, opened at $51.40 and was trading at $54.17 shortly before noon, a 5.8 percent jump. Reynolds American stock, which opened at $114.50, was trading at $119.60 a few minutes before noon, a 4.6 percent increase.
The stocks jumped even though Wall Street analysts who follow the tobacco industry have long said they expected Florida's top court to rule in favor of tobacco companies.
In 2000, a trial court awarded a class of 700,000 plaintiffs $145 billion in the case, which was originally filed in Miami in 1994 by a pediatrician, Dr. Howard Engle, and five other plaintiffs. Jurors in the case found tobacco companies liable for lying about cigarettes.
In 2003 an appeals court overturned the ruling. That decision was appealed to the Florida Supreme Court, which heard the case in 2004.
The Florida justices, though, reinstated judgments, for $2.85 million and $4.02 million, for the two people who had originally filed the lawsuit. They each had cancer.
