A decision by a Florida jury to impose punitive damages of $23.6-billion (U.S.) against RJ Reynolds Tobacco Company is likely to be rejected on appeal or the award reduced substantially, lawyers with expertise in jury awards said on Sunday.
The award, which the cigarette maker has said it will contest, likely falls outside the boundaries for punitive damages that the U.S. Supreme Court has laid down in a series of cases, the lawyers said.
A Florida state court jury decided the award on Friday in a case brought by Cynthia Robinson of Pensacola.
She is the widow of a chain smoker, Michael Johnson, who died of lung cancer in 1996 at 36.
After a four-week trial and 11 hours of deliberations, the jury returned a verdict granting compensatory damages of $7.3-million to the widow and the couple’s child, as well as $9.6-million to Mr. Johnson’s son from a previous relationship.
The same jury deliberated for another seven hours before awarding Ms. Robinson the additional sum of $23.6-billion in punitive damages, according to the verdict forms.
RJ Reynolds is a unit of Reynolds American, which last week announced it would acquire rival Lorillard Inc. in a cash-and-stock deal valued at $27.4-billion, including net debt.
“Nobody thinks the $23-billion is going to remain,” said Richard Daynard, a law professor at Northeastern University and the chair of its Tobacco Products Liability Project.
Because of constitutional guarantees of due process, the Supreme Court has shown a reluctance to allow punitive damages that are far out of line with compensatory damages in the same case, he said. The court’s general guideline is that the ratio of punitive to compensatory damages should be below 10:1.
The court precedent, though, still leaves room for a punitive award of more than $150-million, Mr. Daynard said.
Punitive damages are meant to discourage companies or people from bad conduct, while compensatory damages are intended to pay victims for their actual losses.
“There were all these concerns about runaway awards with regard to punitive damages,” said Neil Vidmar, professor of law at Duke University. “Some are saying that nine times [the compensatory damages] is the absolute limit, but actually many times, the courts have cut that down to one or two times.”
In 2008, the high court cut a $2.5-billion punitive damages award against Exxon Mobil Corp. for the 1989 Exxon Valdez oil spill off Alaska to about $500-million, saying the ratio in that case should be 1:1 with compensatory damages.
Ms. Robinson sued R.J. Reynolds in 2008 over the death of her husband,claiming the company conspired to conceal the health dangers and addictive nature of its products. Mr. Johnson, a hotel shuttle bus driver, smoked one to three packs a day for more 20 years, starting at age 13.
Ms. Robinson’s lawsuit originally was part of large class-action litigation known as the “Engle case,” filed in 1994 against tobacco companies.
A jury in that case issued a verdict in 2000 in favour of the plaintiffs, awarding $145-billion in punitive damages, which at the time was the largest such judgment in U.S. history.
That award, however, was rejected in 2006 by the Florida Supreme Court, which decertified the class. It agreed with a lower court that the group was too disparate and that each consumer had smoked for different reasons.
But the court said the plaintiffs could file lawsuits individually. Ms. Robinson was one of them.
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